MEANING OF SUPPLY

Quantity of the commodity offered for sale considering different possible prices at a point of time.

DEFINITION
The supply of goods is the quantity offered for sale in a given market at a given times at various prices - Thomas

ASSUMPTIONS
There is no change in the prices of the factors of production No change in the technique of production No change in the goal of the firm No change in the prices of related goods Producers don't expect change in the price of the commodity in the near future

EXTENSION OF SUPPLY
When change in quantity supplied of a commodity is caused by change in its price.
PRICE OF ICECREAM(RS)
1

QUANTITY SUPPLIED
1

DESCRIPTION
RISE IN PRICE

EXTENTION OF SUPPLY

CONTRACTION OF SUPPLY
Other things being equal , when quantity supplied of a commodity decreases due to fall in its price.
PRICES OF ICECREAM
5 1

QUANTITY SUPPLIED
5 1

DESCRIPTION
FALL IN PRICE CONTRACTION OF SUPPLY

INCREASE IN SUPPLY
When firms are willing to supply more of a commodity at its existing price. It may be owing to cheaper availability of inputs or due to technological improvements causing a reduction in cost of production , or other such factors.
PRICES OF X QUANTITY SUPPLIED OF X 20 30

10 10

DECREASE IN SUPPLY
When firms are willing to supply lesser quantity of a commodity at its existing price. It may be owing to decrease in no of firms, techniques becomes obsolete, or other factors.
PRICE OF X 10 QUANTITY SUPPLIED OF X 30

10

20