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    CH 5 Supply

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    Saleem Bhatti

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    CH 5 Supply

    Uploaded by

    Saleem Bhatti
    13 views6 pages

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    ch 5 supply

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    13 views6 pages

    CH 5 Supply

    Uploaded by

    Saleem Bhatti

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    © All Rights Reserved
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    of 6
    ao oly’ ee 5 SSS EEE SUPPLY (supply means_a_schedule of prices, and the corresponding amounts tha 2 aL ap. m t roducers off ar x - Quantity supply means the amo! mmodities offered for sale at a particular price. The term supply is 2 | r price. Tht i different from production or stock. Production, stock and apply are He So lt stoc different things. Productionmeans the transformation of inputs into outputs. All the production is not offered for sale. Some amounts are stocked for futu supply, ‘Supply’ itself is the actual amount offered forsale during a particular time period in a market. Tt ‘DETERMINANTS OF SUPPLY Many things determine the supply of any’product. The most important ones are discussed here: . Price xP PAS Price is the main factor affecting the supply of any product. The relationship of price and supply is called the law of supply which is discussed in the forthcoming analysis. Price of Other Goods © The resources to produce a particular good can be diverted to produce other goods. This means that if the price. of some other commodity increases, the resoutces will somehow be diverted to the production and supply of that good due to the increased profit margin. Thus, prices of other commodities may influence the supply of the commodity under consideration. Level of Technology }” . Technology means the knowledge and ability that people have, to produce a commodity. It refers to the technique of production, a ney in more goc tbe produced by the same resources. Due fo greater efficiency i ma Be to decrease in the cost of production, the supply may increase. jon E i Prices of Resources/Cost of Production . me resources to be processed to produce commodities. We always require $0 s ce ci aa Tabour, capital, raw material etc If the PS® i, aed) Oe snl i ” the supply will decrease due to fewer profit S| margins and vice vers@- . “a \ AN INTRODUCTION TO ECONOMICS By 5 7 The Number of Sellers ; . 5 the sisgly'ah sellers of a particular product increases, the supply will ine, Te canter aes can increase due to-higher profit margins or due je barriers on international trade. [Foreign seller may enter the market as a resu 7 decreased trade barriers) Expectations . . lF ectations affect the supply of any good or service. Producing a goog of service takes time. For example, a businessman who is establishing a factory mq take several years to start supplying the product. His decisions are based on, future expectations about the business environment, demand for the product ete, Similarly a student’ studying commerce subjects to become a chartereg accountant is spending his time and money with the expectation that his wage rate would be high. [se THE SUPPLY FUNCTION / . We'can write the supply as a function of different determinants of supply as: Q =f(P, T, RN, E,. where “at sft Q.. = Quantity supplied,

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