Chapter-11 SUPPLY

SUPPLY

supply of a commodity refers to a various quantities of a commodity that the producers are willing to sell at different prices of the commodity at a point of time.

 

STOCK

Stock of a commodity refers to the total quantity of that commodity which at any given time is a available in the market with the seller.

 

DIFFERENCE BETWEEN STOCK AND SUPPLY

An agriculturist who has produced 500 quintals of wheat during a given period may offer for sale 100 quintals @ of  Rs 200 per quintals, 150 quintals @ of Rs 250 per quintals. In this case stock of wheat is 500 quintals and supply is 250 quintals at different prices.

 

SUPPLY AND QUANTITY SUPPLY

Quantity supplied refers to a specific quantity of a commodity that the producers are ready to sell at a specific price of the commodity.

 

INDIVIDUAL AUPPLY SCHEDULE

A individual supply schedule supply schedule is tabular statement which show different quantities of a commodity offered for sale at different prices by individual firm in the market.

 

INDIVIDUAL SUPPLY CURVE

An Individual supply curve is a graphical representing different quantities of a commodity that would be supplied at different price by individual firm in the market.

 

MARKET SUPPLY

Market supply refers to the total quantity supplied of a commodity by all the firms in the market at a given price.

 

MARKET SUPPLY SCHEDULE

Market supply schedule is a tabular statement which show total of various quantities offered for sale by all the firms at different prices.

 

Factors that affect supply of a commodity are:

 

  • PRICE OF THE COMMODITY
  • NUMBER OR FIRMS
  • CHANGE IN TECHNOLOGY
  • GOVERNMENT POLICY
  • EXPECTED FUTURE PRICE
  • PRICE OF FACTORS OF PRODUCTION
  • GOAL OF THE FIRM
  • PRICES OF OTHER GOODS

 

LAW OF SUPPLY

The law of supply states that other thing remaining constant, when higher the price, greater the quantity supplied. Lower the price, smaller the quantity supplied.”

 

REASONS FOR LAW SUPPLY

  • Profit Motive
  • Change in number of firms
  • Change in stock

 

The various exceptions to the law of supply

  • Future Expectations
  • Agricultural goods
  • Perishable goods

 

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