Supply Analysis
Meaning of Supply
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In simple words, supply is an amount of
goods and services which a seller is willing
to sale at a given time period at a given
price, other things remaining same. The
term supply includes –
Stock for sale
Readiness/willingness to sale
Given amount/quantity of goods and
services
Given price
Given time period
Definition
• Thomas - “The supply of goods is the
quantity offered for sale in a given
market at a given time at various
prices.”
• Anatol Murad, “The quantity
supplied refers to the quantity of a
commodity offered for sale at a
given price in a given market at a
given time.”
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SUPPLY SCHEDULE
Individual Supply Schedule
Price ( Rs.)
Q.S. (Units)
1
10
2
20
3
30
4
40
5
50
Market Supply
Schedule
Price (Rs)
Firm A
Firm B
Market Supply
1
10
5
15
2
20
10
30
3
30
20
50
4
40
30
70
5
50
40
90
SUPPLY CURVE
• Individual Supply Curve
• Market Supply Curve
Law of Supply
In Law of Supply, the relation between
price and supply of a commodity is
studied, whereas other factors remain
constant. There is a positive relation
between price and quantity supplied.
Qs =f (P)
• Dooley - “The Law of Supply states that,
other things being equal, the higher the
price, the greater the quantity supplied or
the lower the price, the smaller the quantity
supplied.”
Assumptions:
• Prices of a particular commodity are
changeable.
• Prices of related goods remain constant.
• Methods of product will not change.
• Technology is constant.
• Cost of production is constant.
• Size of industry or number of firms is
same.
• Taxation policy is constant.
• Government policy is constant.
Tabular Explanation
Price ( Rs.)
Q.S. (Units)
1
10
2
20
3
30
4
40
5
50
Factors Affecting Supply of
Goods
QS = Quantity Supplied
P = Price of a commodity
S = Subsidy
PR = Price of related goods
TX = Tax
Pi = Price of inputs
GF = Goal of firms
SN = Number of suppliers
PE = Price Expectations
T = Technology
GP = Government Policy
Change in Supply
• Movement along Supply Curve
1. Extension or Expansion of Supply
2. Contraction of Supply
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Shifting of Supply Curve
1. Increase in Supply
2. Decrease in Supply