MARKET SUPPLY

Supply

• the total value of a good or service that is available for sale to customers.

• the set of all quantities supplied at different price levels at a given time period

Quantity Supplied

the number of units a seller is willing and able to sell at a given price at a given time period

Supply Function

• shows the dependence of supply on various determinants that affects it

• Qs=a+bP

Supply Schedule

• illustrates different quantities the seller is keen to sell at various prices

• table that summarizes the quantity supplied for every price level

Supply Curve

• graphical representation of the supply schedule

• is expected to have an upward slope since price and quantity supplied are positively related

Law of Supply

It depicts a positive or direct relationship that prevails between price and quantity supplied. As price increases, the quantity supplied rises; as price decreases, the quantity supplied falls.

Cost of Input/ Resources

The cost of production incurred by the firm is determined and is affected by the prices of the resources used in the production process. Increase of the resources prices also increases the production cost, and it potentially reduces the profits.

Technology

Improvements in technology or techniques in production enable firms to produce more. The ability to produce more lowers the cost of producing goods, which in turn increases profit.

Taxes and Subsidies

The level of supply is also affected by the government through taxes imposed or subsidies given.

Prices of Other Goods

Companies that manufacture or sell a particular product switched to other product line by means of increasing its production of “other goods” when the prices of the “other goods” increases in order to increase the profit.

Producers’ Expectations

Expectations about a product's future price affect the willingness and ability of a producer to supply a product.

Number of Producers

The more the sellers are in the marketplace, the greater the supply. The fewer the sellers mean there is less supply.