What is supply and define its determinants


Supply is the scarce goods. It is the amount of a commodity that sellers are able and willing to offer for sale at different prices per unit of time. In other words of Meyer “Supply is a schedule of the amount of a good that would be offered for sale at all possible prices at any period of time; e.g. a day, a week and so on.”

Determinants of Supply
When the supply of a commodity rises or falls due to non-price determinants, the supply is said to have increased or decreased. The increase or decrease, or the rise or the fall in supply may take place on account of various factors. They are stated briefly as under.

1.         Change in Factor Prices: The rise or fall in supply may take place due to change in the cost of production of a commodity. If prices of various factors of production used in the production of a particular commodity increase, it will result in the increase of its total cost of production. There will be a reduction in the supply of that commodity at each price because the amount demanded decreases with a rise in price. Conversely, if prices of the various factors of production fall down, it will result in lowering the cost of production and so an increase in supply on varying prices.

2.         Changes in Technique: The supply of a commodity may also be affected by progress in technique. If an improvement in technique takes place in a particular industry. It will help in reducing its cost of production. This will result in greater and so an increase in the supply of the commodity. The supply curve will shift to the right of original supply curve.

3.         Improvement in the Means of Transport: The supply of a commodity may also increase due to improvement in the means of communication and transport. If the means of transport are cheap and fast, then supply of the commodity can be increased at a short notice at lower prices.

4.         Climatic changes in case of Agricultural Products: The supply of agricultural product is directly affected by the weather conditions and the use of better methods of production. If rain is timely, plentiful, well-distributed and improved methods of cultivation are employed, then other things remaining the same, there will be bumper crops. It would then be possible to increase the supply of the agriculture products.

5.         Political Changes: The increase or decrease in supply may also take place due to political disturbances in a country. If a country wages war against another country, or some kind of political disturbances takes place just as we had at the time of Partition, then the channels of production are disorganised. It results in the decrease of certain goods. The supply curve shifts to the left of original supply curve.

6.         Taxation Policy: If a government levies heavy taxes on the import of a particular commodity or commodities then the supply of these commodities is reduced at each price. The supply curve shifts to the left. Conversely, if the taxes on output in a country are low and government encourages, the import of foreign commodities, then the supply can be increased easily. The supply curve shifts to the right of original supply curve.

7.         Goals of Firms: If the firms expect higher profits in the future they will take the risk and produce goods on the large scale resulting in larger supply of the commodity. The supply curve shifts to the right.

Comments

Post a Comment

Popular posts from this blog

What is the Dynamic Theory of Profit

Image
Clark's Dynamic Theory of Profit And Its Criticism The Dynamic Theory of Profit is associated with the name of an American Economist, J. B. Clark. In the world of reality, according to J. B. Clark, profit arises only in a dynamic economy. An economy is said to be dynamic when there is a change in population growth or change in the method of production or a change in the consumer’s wants, etc. A society which is without these changes is called a static society. In a static society, only monopoly profits continue to exist. All other economic profits are gradually eliminated by competition. In a dynamic society, an entrepreneur is always confronted with continuous unpredictable changes in demand for his product. The variation in demand may take place due to changes in fashions, tastes, the standard of living, distribution of income, population, new inventions, international repercussions, technological advances, etc. A prudent entrepreneur will always keep an eye on future demand
Read more

Compare the anatomy of Bifacial and Isobilateral leaves

BIFACIAL LEAF: It is also called dorsiventral leaf. This leaf is more strongly illuminated on upper surface than on lower surface. This unequal illumination induces a difference in the internal structure between upper and lower sides. Its internal structure shows: (1)        Upper Epidermis This is single layer of cells with thick cuticle which checks excessive evaporation of water from the surface. It does not contains chloroplasts, stomata are also absent. (2)        Lower Epidermis This is also single layer but with a thin cuticle. It bears many stomata, two guard cells of which contain some chloroplast, none are present in the epidermal cells. Internal to each stomata is large cavity called respiratory cavity. Lower epidermis of leaf is meant for exchange of gases (oxygen and carbon dioxide) between the atmosphere and the plant body. Excess water also evaporates from lower epidermis. (3)        Mesophyll The ground tissue lying between upper epidermis and th
Read more

osmoregulation in terrestrial and aquatic animals

Mechanism of osmoregulation is very important for all groups of animals whether inhibting land or water. Unlike plant cells, animal cells when placed in hypotonic solution burst due to the continuous absorption of water. On the contrary they would shrink and die if constantly placed in hypertonic solution. Normally uptake and loss of water are in balance for proper survival of cell. (1)        Osmoregulation in terrestrial animals: Terrestrial animals are more likely to loose water by evaporation through their permeable surfaces exposed to amsophere. Among various animal groups only Arthropods and vertebrates became the most successful land dwellers. They have developed number of strategies to maintain osmoregulation of their body fluid. (a) Water proof external coverings: To prevent water loss through external surfaces, vertebrates like reptiles, birds and mammals have water proof keratinized epidermis. Similarly the insects have developed external water proof layer called
Read more