Introductory Economics

Supply

Supply:
Supply means the quantity offered at certain in a certain market at a particular time. The term stock means the total amount of a commodity in existence, whereas, supply means that part of stock which is offered for sale at a certain price at a certain time in a certain market.

Supply Schedule and Supply Curve:

• A supply schedule means a table which shows quantities of a given commodity offered for sale at all possible prices at a given time in a certain market. For example supply schedule is shown as below.

Price	Quantity
30	150
45	200
50	250
80	300

The graphic presentation of a supply schedule is called supply curve. The supply curve represents the maximum quantities per unit of time that will be offered for sale at various prices. The quantity supplied varies directly with the price.

Law of Supply:

• As price rises, other things remaining the same, the quantity offered for the sale tend s to increase, and as price falls, the quantity offered for the sale will tend to decrease. This tendency of the changes in supply as a result of changes in price is called law of supply. There are some exceptions to this law, which are:
• During depression, when prices fall, the producers may sell more in order to avoid losses
• Some time more is sold in order to finish old stocks.
• At time of auction, goods may be sold at any price and law of supply does not apply.

Increase/ Decrease and extension/ contraction of supply:

• The variations in the price of a commodity cause extension or contraction of supply. As price of a commodity rises quantity supplied also increases.
• Similarly, with fall in price, quantity offered for sale decreases. The movement along the same supply curve with variations in price results into extension or contraction in supply.

• When supply changes on account of variations in other factors such as cost of production, changes in the production technology, weather etc, it is called shift in supply or increase or decrease in supply.