What is Supply? Explain in detail the law of Supply
Supply is the
amount of a commodity that sellers are able and willing to offer for sale at
different prices per unit of time. In the words of Mayer “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.”
The Law of
Supply
There is a
direct relationship between the price of a commodity and its quantity offered
for sale over a specified period of time. When the price of a good rises, other
things remaining the same, its quantity which is offered for sale decreases. This
relationship between prices and the quantities which suppliers are prepared to
offer for sale is called the law of supply. The law of supply, in short states
that ceteris paribus sellers supply more goods at a higher price than they are
willing at lower price. The supply function is now explained with the help of
schedule and a curve.
Market Supply
Schedule of a Commodity
In the table
above, the producers are able and willing to offer for sale 100 units of a
commodity at price of Rs.4. As the price falls the quantity offered for sale
decreases. At price of Rs. One the quantity offered for sale is only 40.
Supply Curve
The market
supply data of commodity X as shown in the supply schedule is presented
graphically as under.
In the above
figure price is plotted on the vertical axis OY and the quantity supplied on
the horizontal axis OX. The four points d, c, b, and a show each price quantity
combination. The supply curve SS' slopes upward from left to right indicating
that less quantity is offered for sale at lower prices and more at higher
prices by the sellers. The supply curve is usually positively sloped.
The supply
function can also be expressed in symbols.
Comments
Post a Comment