Supply Analysis

A commodity's supply refers to the various amounts of the commodity that a seller is willing and able
to sell at various prices in a specific market at a particular time, all other things being equal. What the
seller is able and willing to give for sale is referred to as supply. The quantity supplied is the quantity of a
specific good that a company is prepared and ready to offer for sale at a specific price during a specific
time frame.

Supply Schedule: is a table outlining the maximum amount of a commodity that businesses can sell at
various rates.

Law of Supply: is the correlation between the price of a commodity and the supply of that commodity.
In other words, a rise in price will result in a rise in the amount given, and vice versa.

Supply Curve: a visual representation of the volume of a commodity sold by a company at various
prices. From left to right, the supply curve is upward sloping. Consequently, the supply's price elasticity
will be positive. Supply curve graph

Determinants Of Supply:

1. The cost of factors of production: The price of the element influences the cost. Increases in
factor costs raise manufacturing costs and cause supply to decline.

2. The state of technology: Utilizing cutting-edge technology boosts an organization's production

and supplies.

3. External factors: The supply is affected by external variables like the weather. A flood will
decrease the supply of many agricultural crops.

4. Tax and subsidy: Government subsidies that are increased lead to increased supply and
production.

5. Transport: Better transportation infrastructure will boost supply.

6. Price: In order to boost their profit, retailers are eager to provide more things at high costs.

7. Price of other goods: When the cost of other items exceeds a certain threshold, the supply of a
given good will increase.

Elasticity of Supply: The responsiveness of a quantity supplied to a unit change in price of a commodity
is known as the elasticity of the supply of that item.

Kinds Of Supply Elasticity

 Price elasticity of supply: The responsiveness of changes in quantity delivered to a change in

price is measured by price elasticity of supply.
  Perfectly inelastic: If there is no response in supply to a change in price. (Es = 0)

 Inelastic supply: Compared to the change in price, the corresponding change in supply is lower.
(Es =0-1)

 Unitary elastic: The percentage change in supply is equal to the percentage change in price.
(Es=1)

 Elastic: More has been supplied as a result of the price change than previously. (Ex= 1- ∞)

 Perfectly elastic: Suppliers are willing to provide any quantity at the specified price. (Es=∞)

The primary determinants of supply elasticity are the existence of substitutes on the market and the
length of the period; the higher the elasticity, the shorter the period.

Factors Influencing Elasticity Of Supply

1. Nature of the commodity: The supply elasticity will be lower if the good is perishable in nature.
The supply is highly elastic for durable items.

2. Time period: Supply is inelastic if the operational time is short. The supply elasticity will be
relatively elastic if the production process is longer.

3. Scale of production: Compared to major manufacturers, the supply from small scale producers
is inelastic.

4. Size of the firm and number of products: If the company operates in a vast industry with a wide
range of products, it will find it simple to transfer resources. As a result, the supply of these
goods is highly variable.

5. Natural factors: Agricultural items are relatively inelastic since natural disasters might have an
impact on their output.

6. Nature of production: The elasticity of supply will be significant for things requiring more artistic
or specialized labor.

Future market expectations, national natural resources, and governmental controls can all affect a
good's availability in addition to the previously listed reasons. In the long run, production cost has an
impact on supply. Some current producers may withdraw from the market if costs are growing, and new
business owners may be reluctant to enter the market.