Economics notes on Supply topic

I I • . I I


Stock
Supply
Basis of Difference Stock refers to the total quanti
al ount of a product
'Supply' refers to tot d a:r (or a supplier) is commodity available with th ty of the
e Prod
(or service) that a) pro ; for sale at a given the present or future sale. Ucer for
able to ou er .
willi ng (and · pnce)
period and a set price (or a given .
Stock is not a flow concept. It is
Supply is a flow concept. It is measurehd p~r 111
a point of time. easured at
2. Concept · . E le· A teac er IS
unit of time penod. xamp ·
willing to offer his services 8 hours. per day,
at the given wage oft 50,000 per month.
. Stock is not related to price of the
Supply is always related to price of the . ,. , f h cornmod·
ity.
3. Relation with Price It IS mventory o t e firm related
commodity. to exp
demand. ected



Supply and Quantity Supplied
There is a difference between 'supply' and 'quantity supplied', as under:
■ The term 'supply' often refers to the entire supply schedule showin
various quantities of a commodity that the producer is willing to se~
corresponding to different possible prices of that commodity.
■ 'Quantity supplied' on the other hand refers to a specific quantity of ,
the commodity which the producer is willing to sell against its specific ,
price.
Supply and
antity Suppli


( Supply ) { Quan~i~y Supplied
'----= ·- ~= _,-._.....,
1
Supply refers to various i Quantity supplied refers to a
quantities which a producer is specific quantity of a commodity
ready to sell at different possible that a producer is ready to
prices of the commodity at a sell at a specific price of the
period of time. commodity.




2. SUPPLY SCHEDULE
Supply schedule is a table showing various quantities of a commodity_
offered for sale at different possible prices of that commodity at a period of
time. It has two aspects:
(1) Individual Supply Schedule, and
(2) Market Supply Schedule.


(1) Individual Supply Schedule
■ Individual I h · dividual
supp Y sc edule refers to supply schedule of an in
producer (or a firm) in the market.

, ·fferent
v:s drices
t
quantities. which
. . . .
a fi rm is
. willing
.
sbo of a commodity. · to sell at different
-1
1
po55 ible P·ndividual supply schedule
·s 1111 I •
1'
,ble 11 Table 1. Individual Su PP IY Schedule
1
. ofGood-X) Qx (Quantity ofGood•X)
(Pf'lce
Px (f) __ (Units) .


10 10
15 20
20 30

I


bser"ations
0 Table shows. that. the producer. is willing to sell m
· ore at a h'1gh er pnce.
.
1
1 '$hen_the pnce is~ l0 ~er umt,_ qu~ntity supplied is 10 units. When
1 rice rises to f 15, quantity supplied mcreases to 20 units. So that there
fs a positive relationship between price and quantity supplied of a
commodity.

(Z) Market Supply Schedule
Market supply schedule refers to supply schedule of all the firms/
1 producers in the market producing a particular commodity.
Sum total of the firms producing a particular commodity is called
1 'Industry'. Thus, market supply
schedule refers to supply schedule of
the industry as a whole.
Tible 2 is a market supply schedule. It is based on the assumption that
!here are only two firms (A and B) supplying Good-X in the market.
Table 2. Market Supply Schedule
Market Supply
Qx (Firm 'B')
~- (Price ofGood-X) Qx (Firm 'A') (Units)
(Units)
(t) (Units)
0
0
5 0 10 + 5 SI 15
5
10 10 20 + 10 =30
10
15 20 30 + 15 • 45
15
20 30

Obse
Likrtations . hi between price
1
andeTable 1, Table 2 also shows the positive relations p
I '"'h quant'ity supplied of a commodity. 1
w en . . . (10 + 5) un its = s units.
I ~h Price 1s ~ 10 per unit, market supply is . ket supply
en th . ,. 15 er unit, the mar
llso .incree price increases from t 10 to " Prnodtt)'•
,
ases fromlS to 30 units of the corn