Supply

SUPPLY

The supply o f a commodity means the amount of that commodity which producers are able and willing to offer for sale at a given price. The supply curve is explained with the help of a diagram.

X axis-----Quantity Supplied

Y axis------Price

Explanation: The figure shows that as the price of a commodity increases from P to P1, the supply also increases from Q to Q1. It means that price & supply are directly related.

Reserve Price

If the p rice falls too much, supply ma y dry up altogether. The price below which the seller will refuse to sell is called Reserve P rice. At this price, the seller is said to buy his own stock.

Law of Supply

?Otherthingsremaining thesame,as the price of a commodity rises, its supply increases; and asthepricefals,itssupplydeclines.?

Supply function

Supply function of a firm or an industry (a group of firms) is an algebrate expression relating the quantity of a commodity which a seller is willing and able to supply. The supply function can be written as: ?x=f(Px,FE,FP,PR,W,E,N)

Where certain important determinants of supply are: Product price (Px), Factor productivities

or State of Technology(FE), Factor prices(FP), rises of other products related in production(PR), Weather, strikes and other short-run forces(W),Firm'sexpectationsabout

future prospects for prices, costs, sales and the sate of economy in general(E), Number (N)