AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Economics

Indu Grewal

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Theory of Supply
Supply: The supply of goods is the quantity offered for sale in a given market at a given time at various prices. --- Thomas. Stock: It refers to the total quantity of that commodity which at any given time is available in the market with the seller.

Quantity supplied: It refers to a particular amount of a commodity offered for sale, at a particular price at a point of time.
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AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Law of Supply
Statement The Law of Supply states that other things remaining constant, quantity supplied of a commodity increases with increase in price. Assumptions No change in the prices of 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 No change in the expected future price by the producers,

1. 2. 3. 4. 5.

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Explanation
Y

Price (Rs) 100 200 300

Supply ( Units) 10

P1

20 30

PRICE

S
X S S1

SUPPLY

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Exceptions to the Law of Supply

Agricultural Products Goods having social distinction Perishable goods

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Supply Schedule is a tabular presentation of various quantity of a commodity offered for sale, corresponding to different possible prices. Supply Curve is a graphic presentation of supply Schedule Types of Supply Curves

Types of Supply Schedules

Individual supply schedule refers to tabular representation of different quantities offered for sale by a firm at different prices Market supply schedule refers to supply schedule of all the firms in the market.

1.

2.

Individual supply curve is a a graphic presentation of individual supply schedule Market supply curve is a graphic presentation of market supply schedule.

AMITY GLOBAL BUSINESS SCHOOL

Chandigarh

Factors Affecting Supply

Price of the commodity Price of substitutes Number of firms Goal of firm Price of factors of production Change in technology Government policy Price expectations Nature of industry Non economic factors
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