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Supply means the willingness and ability of sellers (producers) to offer a commodity for sale at a given price and time. Mere stock is not supply unless it is offered for sale.
Supply schedule is a table showing quantities supplied at different prices.
Supply curve is a graphical representation of supply schedule. It generally slopes upward from left to right.
Law of supply: Other things remaining constant (ceteris paribus), quantity supplied of a commodity increases when price rises and decreases when price falls.
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Supply means the willingness and ability of sellers (producers) to offer a commodity for sale at a given price and time. Mere stock is not supply unless it is offered for sale.
Supply schedule is a table showing quantities supplied at different prices.
Supply curve is a graphical representation of supply schedule. It generally slopes upward from left to right.
Law of supply: Other things remaining constant (ceteris paribus), quantity supplied of a commodity increases when price rises and decreases when price falls.
Supply depends on:
Elasticity of supply measures the responsiveness of quantity supplied to a change in price. E_s = \frac{\\%\\,\\Delta Q_s}{\\%\\,\\Delta P}
Market equilibrium is the situation where quantity demanded equals quantity supplied at a particular price. The equilibrium price is also called market-clearing price.
From this topic
Supply is affected by cost of production (input prices), technology (improves output and lowers cost), government policy (tax reduces supply, subsidy increases), and number of sellers in market. Prices of related goods (substitutes in production), weather conditions (agriculture) and expectations of future prices also influence supply. Changes in these factors shift supply curve.
Movement along supply curve occurs due to change in price of the commodity and is called extension (price rise) or contraction (price fall). Shift of supply curve occurs due to change in other factors like cost, technology, taxes/subsidies, number of sellers etc. It causes increase in supply (right shift) or decrease in supply (left shift).
Supply means the willingness and ability of sellers to offer a commodity for sale at a given price and time. Supply is not mere stock; it is the amount actually offered for sale.
Law of supply: Other things remaining constant (ceteris paribus), quantity supplied increases when price rises and decreases when price falls. Thus price and supply are directly related.
Reasons for law of supply: Higher price increases expected profit, so producers are willing to produce and sell more. Also, to produce more output, firms often face rising marginal cost because less efficient resources are used; therefore higher prices are required to cover higher costs. In the long run, higher prices and profits attract new firms into the industry, increasing supply.
Exceptions: In the very short period, especially in agriculture, supply may not respond immediately due to time lag. For perishable goods, sellers may supply more even at lower prices to avoid spoilage. For rare goods with fixed supply, quantity cannot increase with price. In labour market, at very high wages supply may bend backward in some cases.
Hence, law of supply generally holds but may not apply under special situations.