Supply is the amount of a commodity that sellers are able and willing to offer for sale at different prices per unit of time. In the words of Mayer “Supply is a schedule of the amount of a good that would be offered for sale at all possible prices at any period of time e.g. a day, a week, and so on.”
The Law of Supply
There is a direct relationship between the price of a commodity and its quantity offered for sale over a specified period of time. When the price of a good rises, other things remaining the same, its quantity which is offered for sale decreases. This relationship between prices and the quantities which suppliers are prepared to offer for sale is called the law of supply. The law of supply, in short states that ceteris paribus sellers supply more goods at a higher price than they are willing at lower price. The supply function is now explained with the help of schedule and a curve.
Market Supply Schedule of a Commodity
In the table above, the producers are able and willing to offer for sale 100 units of a commodity at price of Rs.4. As the price falls the quantity offered for sale decreases. At price of Rs. One the quantity offered for sale is only 40.
Supply Curve
The market supply data of commodity X as shown in the supply schedule is presented graphically as under.
In the above figure price is plotted on the vertical axis OY and the quantity supplied on the horizontal axis OX. The four points d, c, b, and a show each price quantity combination. The supply curve SS' slopes upward from left to right indicating that less quantity is offered for sale at lower prices and more at higher prices by the sellers. The supply curve is usually positively sloped.
The supply function can also be expressed in symbols.
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