SUPPLY FUNCTION…..

BY CHARANDEEP SINGH

BBA-I

610
WHAT IS SUPPLY?
 By supply of commodity is meant that qty of the commodity
which a seller is prepared to sell @ a given price nd @ given
period of time

 The term supply nd stock are used in the same sense

 In the words of THOMAS , the supply of goods is the qty of

offered for sale in a given market @ a given time @ various
prices
SUPPLY FUNCTION
 Supply function studies the functional relationship
between supply of a commodity and its various
determinants . The supply of a commodity mainly
depends on the goal of the firm , price of the
commodity , prices of inputs , technology , prices of
related goods , number of suppliers , expectations of
producers and government polocies.

s=f{g,p,I,t,p,n,e,g}
FACTORS INFLUENCING SUPPLY
 GOALS OF THE FIRM
 GOOD’S OWN PRICE
 PRICES OF INPUTS
 TECHNOLOGY
 PRICE OF RELATED GOODS
 THE NUMBER OF SUPPLIERS
 EXPECTATION
 GOVERNMENT POLICES
 TAXES AND SUBSIDIES
 WEATHER
LAW OF SUPPLY
 In the words of DOOLEY , the law of supply
states that other thing being equal the
higher the price , the greater the qty
supplied or the lower the price , the
smaller the qty supplied
SUPPLY SCHEDULE
 Supply schedule is a table showing various quantities of
a good that sellers would supply @ various prices during
some time period , other things being equal . It has two
aspects:

(1)individual supply schedule : it is defined as the table

which shows quantities of a given commodity which an
individual producer will supply @ all possible prices at a
given time

(2) Market supply schedule : market supply schedule is the

which indicates the total quantity of a commodity all
producers would supply @ each market price per period
of time
SUPPLY SCHEDULES
SUPPLY CURVE
 The supply curve is that curve which shows the
quantity of product the producers are willing to sell at
different price . It generally slopes upward , indicating
that output will increase at higher prices . Like supply
schedules supply curve can be

1:individual supply curve

2: market supply curve

EXCEPTIONS OF THE LAW OF SUPPLY

 This law does not apply rigorously to agriculture

products whose supply is governed by climatic factors .
If due to natural calamities, the production of wheat is
low then its supply will not increase howsoever high the
price may move

 Supply of goods having social distinction will remain

limited even if their prices may rise high.

 Seller will be ready to sell more units of perishable

goods although their price may be falling
CHANGE IN QUANTITY SUPPLY AND
CHANGE IN SUPPLY

 A change in qty supplied is caused by a change in

product’s own price , other factors remaining constant .
It refers to a movement along the supply curve since it
involves a movement from one point on the supply
curve to another point on the same curve . Such change
in qty are termed as extension and contraction

 A change in supply is caused by change in the

determinants other than product’s own price . It results
in the shift of the entire supply curve either to the right
or to the left , it is referred as increase or decrease in
supply
MOVEMENT ALONG SUPPLY CURVE
SHIFT OF SUPPLY CURVE
THANK YOU…