What do you mean by Supply in Economics?
In economics, supply refers to that quantity of a particular commodity that a supplier/seller is willing and able to offer for sale at a particular price and during a particular period of time.
For example, let's say there is a seller for some commodity and he has 50 units of that commodity which he wants to sell in the market. Let's say the market price of that commodity is Rs. 100/- per unit. The seller finds this price as a bit below his expectation and hence he is ready to sell only 10 units at this price in this week. Here you can say that the supply of that product is 10 units at the price of Rs.100/- per unit for next one week. Let's say that the same seller is willing to sell 20 units if he gets the price of Rs.150/- per unit. Here we can say that the supply of the commodity is 20 units at the price of Rs.150/- per unit. We can also say that the supply is 10 units at the price of Rs.100/- per unit and 20 units at the price of Rs.150/- per unit.
As the price goes on increasing, the seller or the supplier would offer more and more units for sale in the market. Hence we can say that as price increases supply also increases and vice versa. We can say that there is a direct relationship between price and quantity supplied. More the price more will be the supply and vice versa. This is called as Law of Supply.
Here it is also important to understand the concepts of Total Output and Stock.
Total Output refers to the total quantity of a particular commodity produced by the producer during a given period of time.
Stock refers to the total quantity of a particular commodity that is available with the seller for sale in the market. It is potential supply. Stock is the maximum quantity that a supplier can offer for sale in the market. In other words, supply cannot exceed stock. At best, supply can be equal to stock (if the seller is ready to offer entire stock for sale in the market). Let's say total unsold units of a particular commodity with seller is 500 units but he is willing to offer only 200 units for sale at the current market price of the commodity. Here you can say that stock available with the seller is 500 units but supply (at current market price) is only 200 units. Stock indicates the seller's ability to offer goods for sale in the market.
What is an Individual Supply Schedule?
It is a table which shows different quantities of a particular commodity that the seller is willing and able to offer for sale in the market at different prices.
For example, the following table shows different quantities of commodity X which a seller is ready to offer for sale at different prices. Such a table is called Individual Supply Schedule.
You can see that the seller is willing to offer only 10 units for sale if the price per unit is Rs.1/-. In other words, the supply is 10 units if the price is Rs.1/- per unit. However, if the price is Rs.5/- per unit, the seller is willing to offer 50 units for sale.
What is a Market Supply Schedule?
It is a table which shows different quantities of a particular commodity which all the sellers are willing and able to offer for sale in the market at different prices.
For example following table shows different quantities of commodity X that all the sellers are willing and able to offer for sale at different prices (assuming that A, B and C are the only sellers in the market). It is called Market Supply Schedule. The market supply is obtained by horizontal summation of individual supplies of A, B and C.
As you can see in the above table, if you want to find market supply of the commodity X at price of Rs.1/- per unit then you need to find sum of individual supplies of all the suppliers (i.e, A, B and C) when the price is Rs.1/- per unit. Accordingly, the market supply, at the price of Rs.1/- per unit, would work out to 60 units (10 units + 20 units + 30 units)
Also refer - Demand
In economics, supply refers to that quantity of a particular commodity that a supplier/seller is willing and able to offer for sale at a particular price and during a particular period of time.
For example, let's say there is a seller for some commodity and he has 50 units of that commodity which he wants to sell in the market. Let's say the market price of that commodity is Rs. 100/- per unit. The seller finds this price as a bit below his expectation and hence he is ready to sell only 10 units at this price in this week. Here you can say that the supply of that product is 10 units at the price of Rs.100/- per unit for next one week. Let's say that the same seller is willing to sell 20 units if he gets the price of Rs.150/- per unit. Here we can say that the supply of the commodity is 20 units at the price of Rs.150/- per unit. We can also say that the supply is 10 units at the price of Rs.100/- per unit and 20 units at the price of Rs.150/- per unit.
As the price goes on increasing, the seller or the supplier would offer more and more units for sale in the market. Hence we can say that as price increases supply also increases and vice versa. We can say that there is a direct relationship between price and quantity supplied. More the price more will be the supply and vice versa. This is called as Law of Supply.
Here it is also important to understand the concepts of Total Output and Stock.
Total Output refers to the total quantity of a particular commodity produced by the producer during a given period of time.
Stock refers to the total quantity of a particular commodity that is available with the seller for sale in the market. It is potential supply. Stock is the maximum quantity that a supplier can offer for sale in the market. In other words, supply cannot exceed stock. At best, supply can be equal to stock (if the seller is ready to offer entire stock for sale in the market). Let's say total unsold units of a particular commodity with seller is 500 units but he is willing to offer only 200 units for sale at the current market price of the commodity. Here you can say that stock available with the seller is 500 units but supply (at current market price) is only 200 units. Stock indicates the seller's ability to offer goods for sale in the market.
What is an Individual Supply Schedule?
It is a table which shows different quantities of a particular commodity that the seller is willing and able to offer for sale in the market at different prices.
For example, the following table shows different quantities of commodity X which a seller is ready to offer for sale at different prices. Such a table is called Individual Supply Schedule.
You can see that the seller is willing to offer only 10 units for sale if the price per unit is Rs.1/-. In other words, the supply is 10 units if the price is Rs.1/- per unit. However, if the price is Rs.5/- per unit, the seller is willing to offer 50 units for sale.
What is a Market Supply Schedule?
It is a table which shows different quantities of a particular commodity which all the sellers are willing and able to offer for sale in the market at different prices.
For example following table shows different quantities of commodity X that all the sellers are willing and able to offer for sale at different prices (assuming that A, B and C are the only sellers in the market). It is called Market Supply Schedule. The market supply is obtained by horizontal summation of individual supplies of A, B and C.
As you can see in the above table, if you want to find market supply of the commodity X at price of Rs.1/- per unit then you need to find sum of individual supplies of all the suppliers (i.e, A, B and C) when the price is Rs.1/- per unit. Accordingly, the market supply, at the price of Rs.1/- per unit, would work out to 60 units (10 units + 20 units + 30 units)
Also refer - Demand
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