SUPPLY

LAW OF SUPPLY
DETERMINANT OF SUPPLY
What is Supply?
Supply is the total amount of a specific good or service that is available to consumers. It
can relate to the amount available at a specific price or across a range of prices. All else being
equal, the supply provided by producers will rise if the price rises because all firms look to
maximize profits.

Understanding Supply
If people demand a good and are willing to pay more for it, producers will add to the
supply; as the supply increases, the price will fall. Ideally, markets will reach a point where the
supply equals the demand (no excess supply and no shortages) for a given price point. At this
point, consumer utility and producer profits are maximized.
 LAW OF SUPPLY

The law of supply relates price changes

for a product with the quantity supplied.
Lower prices mean reduced supply, all
else held equal; the higher the price, the
less quantity is produced. In contrast to
the law of demand, the relationship
between supply and price is direct, not
inverse as in the case of commodities.
 DETERMINANTS OF SUPPLY

Determinants of supply are the factors that can causes changes to, or affect, the supply of a product in the
market.

List of Determinants of Supply

 Price
 The number of sellers in the market
 The price of resources used to produce the product
 Tax rates and subsidies
 Improvements in technology and automation
 Expectations of the suppliers
 The price of related products
 The price of joint products made in the same process
 What are determinants of supply?
Some of the determinants of supply are technology, the
number of suppliers, expectation of suppliers, feedback from
consumers, increase in tax, high wage rate, etc.
What are the factors affecting the supply of
products?

Factors that influence the supply of goods and services

are termed determinants of supply. Some of the factors
which can affect the supply of products are technology,
the number of suppliers, expectations of suppliers,
feedback from consumers, increase in tax, high wage
rates etc.
 What is the law of supply determinants?
The law of supply is the relationship
between the quantity supplied and the
factors which affect it. The most important
determinants of supply are technology, the
number of suppliers, expectation of
suppliers, feedback from consumers, freeze
in tax etc.
What is the most important
determinant of supply?
Technology, the number of suppliers,
expectation of suppliers, feedback from
consumers etc. are some of the factors
which can affect the supply of products.
 How does technology influence supply?
Innovations in technology have resulted in a dramatic
increase in the number of goods being produced per
hour expended. Every such development gives rise to
rightward shift in the supply curve and higher
equilibrium price.