LESSON 4

SUPPLY ANALYSIS
 SUPPLY

• It is the quantity of goods or services

that firms are ready and willing to sell
at given price within a period of time,
other factors being held constant.
• It is a product made available for sale
of firms.
 LAW OF SUPPLY

• It states that “if the price of a good or

services goes up, the quantity supplied
for such good or services will also go
up; if the price goes down the quantity
also goes down, ceteris paribus.”
 SUPPLY SCHEDULE

• It is a schedule listing the various

prices of a product and the specific
quantities supplied at each of these
prices.
HYPOTHETICAL SUPPLY SCHEDULE
FOR RICE PER MONTH

Situation Price(P) Quantity (kg)

A 5 48

B 4 41

C 3 30

D 2 17

E 1 5
 SUPPLY CURVE

• It is a graphical representation showing

the relationship between the price of
the product of factor of production (e.g.
labor) and the quantity supplied per
time period.
P

Q
 SUPPLY FUNCTION

• A form of mathematical notation that links the

dependent variable, quantity supplied (Qs), with
various independent variables which determine
quantity supplied.
• 
• Qs= f (own price, number of sellers, price of factor
inputs, technology, etc.)
CHANGE IN QUANTITY SUPPLIED

• A change in quantity supplied if the

movement, is along the same supply
curve. It is brought about by an
increase (decrease) in the product’s
own price.
 Change in quantity supplied happens
when the price of the product change,
thus, resulting to a change in quantity
supplied.
P
S
b
P2

a
P1

Q1 Q2
 CHANGE IN SUPPLY

• There is a change in supply when the entire demand supply curve shifts
rightward or leftward. At the same price, therefore, more amounts of a good
or service are supplied by producers or sellers.

• Supply decreases if the entire supply curve shifts to the left. At the same
price, fewer amounts of a good or services are sold by producers.

• Increase or decrease in supply is caused by factors other than the rice of the
good itself such as change in technology, business goals, etc. resulting to the
movement of the entire supply curve rightward or leftward.
 P

P
S

P1

Q
Q1 Q2
 P

S
S

P1

Q
Q1 Q2
 FORCES THAT CAUSE THE SUPPLY CURVE
TO CHANGE

1. Optimization in the use of factors of production -Optimization in the utilization

of resources will increase supply, while a failure to achieve such will result to a
decrease in supply.
• Optimization-refers to the process, or methodology of making something as fully
perfect, functional, or effective as possible.
 
2. Technological change- introduction of cost-reducing innovations in production
technology increase supply.

3. Future expectations- impacts sellers as much as buyer. If sellers anticipate a rise in

prices, they may choose to hold back the current supply to take advantage of the future
increase in price, thus, decreasing market supply.
4. Number of sellers- has a direct impact on quantity supplied. The
more sellers there are in the market the greater the supply of goods and
services are available.
 
5. Weather Conditions- bad weather, such as typhoons, drought or other
natural disasters, reduces supply of agricultural commodities while good
weather has an opposite impact.
 
6. Government policy- removing quotas and tariffs on imported
products also affect supply. Lower trade restrictions and lower quotas or
tariffs boost imports, thereby adding more supply of goods in the market.
THANK YOU!!!