Date : 26.5.2020
A very good morning boys
Let us now shift our focus to Supply
1.Supply is always expressed with reference to price
2. Supply is always with respect to a period of time
3. Supply is a desired quantity
4. Supply of a commodity does not comprise the entire stock of the commodity
To sum up we can say Supply is the quantity of a commodity that a firm is willing and able to sell,at each possible price during a given period of time.
Supply for a commodity may be either with respect to an individual or to the entire market.
1. Individual Supply :
2. Market Supply:
Determinants of Supply ( Individual Supply)
1. Price of the given commodity : There exists an direct relation between Price and quantity supplied.
2.Price of Other Goods : Increase in price of other goods makes them more profitable in comparison to the given commodity.So, the supplier shifts his resources to the production of the other good.
3.Prices of Factors of Production (Inputs): There is an inverse relation between the prices of factors of production and supply
4. State of Tecnology: If there is upgraded technology supply of the product increases and vice-versa
5. Government Policy: If taxes increases the supply fall and vice-versa
6. Goals /Objectives of the firms : There are two objectives of a producer :
Determinants of Market Supply
1.Number of firms in the market: More the number of firms in the market more will be the supply of products in the market and vice-versa
2. Future expectation regarding price: If the seller expects prices to fall in future he will try and sell more of the commodity in the present time and vice-versa
3. Means of Transportation and communication: Better means of Transportation and communication will increase the supply of the product and vice-versa
NOTE: All the above factors will be taken into consideration only by keeping all other factors constant.
Supply Function: It shows the relationship between quantity supplied for a particular commodity and the factors influencing it.
It means a relationship of quantity supplied for a particular commodity with any of the above factors mentioned
Supply Schedule : Is a tabular representation of various quantities of a commodity being supplied at various levels of price, during a given period of time.
Individual Supply Schedule
Market Supply Schedule
Supply Curve : It is a graphical representation of Supply schedule.
Individual Supply Curve : It refers to a graphical representation of individual Supply schedule.
Market Supply Curve : refers to a graphical representation of market Supply schedule.
Market Supply curve is obtained by horizontal summation of the individual supploycurves {SA + SB }
Market Supply Curve is Flatter : because as price changes, proportionate change in Market supply is more than proportionate change in individual supply.
Movement along the Supply Curve VS Shift in SupplyCurve
A very good morning boys
Let us now shift our focus to Supply
1.Supply is always expressed with reference to price
2. Supply is always with respect to a period of time
3. Supply is a desired quantity
4. Supply of a commodity does not comprise the entire stock of the commodity
To sum up we can say Supply is the quantity of a commodity that a firm is willing and able to sell,at each possible price during a given period of time.
Supply for a commodity may be either with respect to an individual or to the entire market.
1. Individual Supply :
2. Market Supply:
Determinants of Supply ( Individual Supply)
1. Price of the given commodity : There exists an direct relation between Price and quantity supplied.
2.Price of Other Goods : Increase in price of other goods makes them more profitable in comparison to the given commodity.So, the supplier shifts his resources to the production of the other good.
3.Prices of Factors of Production (Inputs): There is an inverse relation between the prices of factors of production and supply
4. State of Tecnology: If there is upgraded technology supply of the product increases and vice-versa
5. Government Policy: If taxes increases the supply fall and vice-versa
6. Goals /Objectives of the firms : There are two objectives of a producer :
- Profit maximisation
- Sales maximisation
Determinants of Market Supply
1.Number of firms in the market: More the number of firms in the market more will be the supply of products in the market and vice-versa
2. Future expectation regarding price: If the seller expects prices to fall in future he will try and sell more of the commodity in the present time and vice-versa
3. Means of Transportation and communication: Better means of Transportation and communication will increase the supply of the product and vice-versa
NOTE: All the above factors will be taken into consideration only by keeping all other factors constant.
Supply Function: It shows the relationship between quantity supplied for a particular commodity and the factors influencing it.
It means a relationship of quantity supplied for a particular commodity with any of the above factors mentioned
Supply Schedule : Is a tabular representation of various quantities of a commodity being supplied at various levels of price, during a given period of time.
Individual Supply Schedule
Price
|
Quantity supplied of a commodity X(in units
|
1
|
5
|
2
|
10
|
3
|
15
|
4
|
20
|
5
|
25
|
Market Supply Schedule
Price
|
Individual Supply
|
Market Demand (in units ){SA + SB }
| |
Household A (SA)
|
Household B (SB)
| ||
1
|
5
|
10
|
5+10 = 15
|
2
|
10
|
20
|
10+20 =30
|
3
|
15
|
25
|
15+25= 40
|
5
|
20
|
35
|
20+35= 55
|
5
|
25
|
40
|
25+ 40= 65
|
Supply Curve : It is a graphical representation of Supply schedule.
Individual Supply Curve : It refers to a graphical representation of individual Supply schedule.
Market Supply Curve : refers to a graphical representation of market Supply schedule.
Market Supply curve is obtained by horizontal summation of the individual supploycurves {SA + SB }
Market Supply Curve is Flatter : because as price changes, proportionate change in Market supply is more than proportionate change in individual supply.
Law of Supply : states the inverse relationship between price and quantity supplied, keeping other factors constant ( ceteris paribus).
Assumptions of Law of supply
1. Price of other goods do not change.
2. There is no change in the state of technology.
3. Prices of factors of production remains the same.
4. There is no change in the taxation policy.
5. Goals of the producer remain the same.
Price
|
Quantity supplied of a commodity X(in units
|
1
|
10
|
2
|
20
|
3
|
30
|
4
|
40
|
5
|
50
|
Movement along the Supply Curve VS Shift in SupplyCurve
For Elasticity of Supply please refer to the text books
KEVIN SUNIL PAPPAN 11B
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