MEANING OF SUPPLY AND DETERMINANTS OF SUPPLY

Ø  MEANING OF SUPPLY AND DETERMINANTS OF THE SUPPLY (PART 1)
SUPPLY ANALYSIS

Ø  MICRO ECONOMICS/BUSINESS ECONOMICS

Ø  SHASHI AGGARWAL ECONOMICS AND LAW CLASSES

Ø  MEANING OF THE SUPPLY

1. SUPPLY MEANS THE AMOUNT OFFERED FOR SALE AT GIVEN PRICE DURING A CERTAIN PERIOD OF TIME.
2. SUPPLY IS A ALWAYS AT A PRICE AND RELATES TO PERIOD OF TIME
3. THEORY OF SUPPLY IS AS MUCH AS NECESSARY AS THEORY OF DEMAND FOR THE ANALYSIS OF PRICES.

• MEYERS,”WE MAY DEFINE SUPPLY AS A SCHEDULE OF THE AMOUNT OF A GOOD THAT WOULD BE OFFERED FOR SALE AT ALL POSSIBLE PRICES,OF ANY ONE INSTANT OF TIME OR DURING ANY ONE PERIOD OF TIME FOR EXAMPLE A DAY,A WEEK AND SO ON IN WHICH THE CONDITIONS OF SUPPLY REMAIN THE SAME.”
• THOMAS,” THE SUPPLY OF THE GOODS IS THE QUANTITY OFFERED FOR SALE IN A GIVEN MARKET AT A GIVEN TIME AT VARIOUS PRICES.
• SUPPLY AND STOCK
• STOCK MEANS THE TOTAL VOLUME OF A COMMODITY IN EXISTENCE WHICH IS KEPT READY IN GO DOWNS AT CERTAIN TIME.
• SUPPLY  IS THE TOTAL AMOUNT OF COMMODITY WHICH CAN BE BROUGHT INTO MARKET FOR SALE AT SHORT NOTICE. IT IS NOT NECESSARY THAT ALL THE STOCKS OF A COMMODITY IS BEING OFFERED FOR SALE
• SUPPLY MEANS QUANTITY WHICH IS ACTUALLY BROUGHT IN MARKET FOR SALE
• THE STOCK IS QUANTITY OF GOODS THAT COULD BE SOLD. THE SUPPLY IS THE QUANTITY THAT WOULD BE SOLD AT GIVEN PRICE. IF THE PRICE IS LOW THE PRODUCER WOULD OFFER LESS IF PRICE IS HIGH HE WILL BRING MORE IN THE MARKET.
• S=f(PX)
• EXAMPLE
• STOCK OF RICE IS 10,000 IN THE GODOWN
• ON A PARTICULAR DAY AND AT PARTICULAR TIME 1000 QUINTALS OF RICE ARE OFFERED FOR SALE AT 700 PER QUNITALS
• THERE IS DIFFERENCE BETWEEN SUPPLY AND STOCK
• IN CASE OF PERISHABLE GOODS SUPPLY AND STOCK ARE EQUAL
• IN DURABLE GOODS THAT SUPPLY MAY DIFFER FROM THE STOCK OF THE COMMODITY
• SUPPLY FUNCTION
• SUPPLY FUNCTION STUDIES THE FUNCTIONAL RELATION BETWEEN SUPPLY OF A COMMODITY AND ITS DETERMINANTS)
• S=f((P_x , P_i , P_y ,K,N,T,E AND G---ETC)

1. PRICE OF THE GOODS(P_X )
2. PRICE OF THE FACTOR INPUTS(P_i )
3. PRICE OF THE OTHER GOODS(P_Y )
4. TECHNICAL KNOW HOW(K)
5. NUMBER OF SUPPLIER(N)
6. TIME PERIOD(T)
7. EXPECTATION OF THE PRODUCERS(E)
8. GOVERNMENT POLICY(G)

Ø  DETERMINANTS OF THE SUPPLY

1. THE PRICE OF THE COMMODITY IN QUESTION: OTHER THINGS CONSTANT,SUPPLY OF COMMODITY DEPENDS UPON THE PRICE OF THE GOOD. IF THE PRICE IS MORE,THE SUPPLIER WOULD OFFER MORE OR VICE VERSA
2. PRICE OF RELATED GOODS:-ALSO DEPEND UPON THE RELATED GOODS. IN CASE OF SUBSTITUTE IF THE PRICE OF SUBSTITUTE GOES UP,PRODUCER WILL PRODUCE THAT SUBSTITUTE VICE VERSA.
3. PRICE OF FACTOR INPUTS/COST OF PRODUCTION:-IF THE COST OF PRODUCTION IS HIGH,LESS SUPPLY VICE VERSA
4. IMPROVED TECHNOLOGY:-IMPROVEMENT IN THE TECHNOLOGY AND LESS COST OF PRODUCTION WOULD INCREASE THE SUPPLY

5. MEANS OF TRANSPORT AND COMMUNICATION:- IMPROVEMENT IN THE MEANS OF TRANSPORT AND COMMUNICATION MAY INCREASE IN THE SUPPLY OF PARTICULAR COMMODITY,IMPORTS ARE ENCOURAGED BUT IF THE DEVELOPED MEANS OF TRANSPORTATION ARE USED TO EXPORT THE GOODS.IT WILL CREATE SHORTAGE OF THE GOODS
6. GOALS OF THE OBJECTIVE OF THE FIRMS:-SUPPLY OF A COMMODITY DEPENDS UPON THE GOALS OR OBJECTIVE OF THE FIRMS PRODUCING THAT COMMODITY
7. NUMBER OF SELLER:-MORE SELLERS MORE SUPPLY OR VICE VERSA
8. PRICE EXPECTATION: IF THE SUPPLIER IS HOPEFUL THAT PRICE WILL RISE IN FUTURE THEN HE WILL SUPPLY LESS OR VICE VERSA
9. SUPPLY OF AGRICULTURE PRODUCE:-AS REGARDS SUPPLY OF AGRICULTURAL COMMODITIES INCREASE IF THERE IS GOOD RAINFALL.PROPER IRRIGATION,IMPROVED SEEDS ETC BUT FAILURE OF MONSOON,STORM,FLOODS,DROUGHT ETC WILL REDUCE THE SUPPLY
10. TAXATION AND SUBSIDIES:-HIGHER TAXATION MAY RESTRICT THE SUPPLY
11. GOVERNMENT POLICY:-A REDUCTION IN QUOTA AND TARIFF ON FOREIGN GOODS WILL  CREATE MORE SUPPLY OR VICE VERSA
12. AGREEMENT AMONG PRODUCERS:-IF THE PRODUCERS FORM ASSOCIATION OR CARTELS,THEY MAY CREATE ARTIFICIAL SCARCITY