1. PRESENTATION ON SUPPLY
Presented by:
Sunil kumar gupta PGDM(11-13)
Sumit kumar maurya SECTION- B
Surajeet singh
2. SUPPLY
In general, supply refers to production or stock but in economics all the
production or stock are not called supply. Only that part of production or
stock is called supply which are ready for sale at the market prices at any
given period of time.
the quantity of good offered for sale depend on six major
variables
1: the price of good itself.
2: the price of input used to produce good.
3: the prices of goods related in production.
4: the level of available technology.
5: expectation of producer, concerning the future price of good.
6: the number of firms or the amount of productive capacity in the
industry.
3. Supply function
• Qs=f(P,Pi,Pr,T,Pe,F)
• P= price of goods
• Pi= income
• Pr= price of related goods
• T= technology
• Pe= price expectation
• F= Feature of nature
4. Law of supply
• Shows the relationship b/w price of
a commodity and its quantity supply.
• Other thing remaining the same there is
positive relationship between price of
commodity and its quantity supply.
• As price increase quantity supply of a
commodity also increase .and as price decrease
quantity supply of a commodity also decrease
5. Law of supply curve/diagram
px qs
5 100
4 80
3 60
2 40
1 20
6. Measurement of elasticity of supply
• Elasticity of supply of a commodity is the degree of
responsiveness of the quantity supplies to changes in price. Like
the elasticity of demand, the elasticity of supply is the relative
measure of the responsiveness of quantity supplied of a
commodity to a change in its price.
• The, greater the responsiveness of quantity supplied of a
commodity to the change in its price, the greater is its elasticity of
supply. To be more precise, the elasticity of supply is defined as a
percentage change in the quantity supplied of a product divided
by the percentage change in price.
7. measurement of price elasticity of
supply
There are two method of measuring price
elasticity of supply.
1. proportionate or percentage method.
2. geometric method.
8. Proportionate or Percentage Method
According to this method, price elasticity of supply is measured as
under:
Price Elasticity of supply(Es) = %Change in Quantity supplied
% change in price
Or
Es = proportionate change in supply
Proportionate change in price
9. Geometric Method
This method studies five different situations of
`elasticity of supply as under:
(i) Es = 1, unitary elasticity: when a straight line upward
sloping supply curve starts from the point of origin. in this case
percentage change in quantity supplied is equal to the percentage
change in price
10. (ii) Es >1 , or Greater unitary Elasticity :
When a straight line upward sloping supply curve starts
from the percentage change in price . than Y-axis. In this
case , percentage change in quantity supplied is greater than
percentage change in price.
11. (iii)Es<1, or Less that Unitary Elasticity:
When a straight line upward sloping curve starts form the X-axis. In
this case , percentage change in quantity supplied is less than
percentage change in price.
12. (iv) Es = 0 , or Perfectly Inelastic Supply:
It refers to a situation in which there is no change in supply
remains unchanged it is a situation in which price has no
influence on supply. In this case, supply curve is a vertical
straight line as given fig.
13. (V) Es = or perfectly elastic supply :
It refers to a situation in which supply is infinite corresponding to
a particular price of the commodity . Accordingly, a slightest fall
in price causes an infinite change in supply , reducing it to zero .
In this case , supply curve is a horizontal straight line .
