2. What is SUPPLY?
• Supply is a schedule of various
quantities of commodities which
producers are willing and able to
produce and offer at various prices in a
given time and place.
• The amount of goods and services
available for sale in a given period of
time and place.
3. Stock vs. Supply
• Stock is the quantity of output which a
seller has with him and has not yet
brought for sale.
• Supply is a quantity of output brought
from existing stock for sale at a certain
price in a market.
4. Supply Schedule
• The Supply Schedule shows the
different quantities that are offered for
sale at various prices.
• The supply Schedule may reflect the
individual schedule of only one
producers or the market schedule
showing aggregate supply of a group of
sellers or producers.
5. Hypothetical
Supply Schedule
and Rice MarketPrice of Rice (Per Sack) Quantity Supplied
(50Kilos/Sack)
200.00 250,000
175.00 200,000
150.00 180,000
145.00 160,000
130.00 120,000
120.00 115,000
The table indicates
that a seller offer a
big quantity of rice
supply in the market
when the price is
high and likewise,
sells only a few sack
of rice when the
price is low
6. Supply Curve
• It is a graphical form or representation
of supply schedule.
9. Determinants of Supply
• Technology
• Cost of Production
• Number of Sellers
• Taxes and Subsides
• Weather
10. Technology
• Improvement in technology enables more efficient
production of goods and services. Thus reducing
the production costs and increasing the profits. As a
result supply is increased and supply curve is shifted
rightwards. Since technology in general rarely
deteriorates, therefore it is needless to say that
deterioration of technology reduces supply.
11. Cost of Production
• Since most private companies’ goal is profit
maximization. Higher production cost will lower
profit, thus hinder supply. Factors affecting
production cost are: input prices, wage rate,
government regulation and taxes, etc.
12. Number of Sellers
• Greater the number of sellers, greater will be
the quantity of a product or service supplied
in a market and vice versa. Thus increase in
number of sellers will increase supply and
shift the supply curve rightwards whereas
decrease in number of sellers will decrease
the supply and shift the supply curve
leftwards. For example, when more firms
enter an industry, the number of sellers
increases thus increasing the supply.
13. Taxes and Subsides
• Taxes reduces profits, therefore increase in taxes
reduce supply whereas decrease in taxes increase
supply. Subsidies reduce the burden of production
costs on suppliers, thus increasing the profits.
Therefore increase in subsidies increase supply and
decrease in subsidies decrease supply.
14. Weather
• Production of goods also depends on
weather conditions. A business man will
produce more sweaters during cold season,
more umbrella during rainy seasons and light
clothing during summer.
