Class 12 Economics Determinants of supply and Supply Curve Online Notes
Below is a topic of Economics ‘Determinants of supply and Supply Curve’ for Class 12 based on the pattern of CBSE Class 12 Economics.
Supply is different from stock. Stock refers to the excess of goods available in the market over the products offered for sale. Supply is the part of stock which producer offer for sale. It refers to the quantity of the commodity which is available for sale at a certain price at the specified time. It is the quantity of commodity producer is willing to sell at a given price during a particular period of time. Supply increases with the increase in price and decreases with the decrease in price.
“Supply of goods is the quantity offered for sale in a given market at a given time at the various price” Thomas
Types of supply
It refers to the amount quantity an individual firm is willing to sell at a particular price in the market.
It refers to the amount quantity all the firms are willing to sell at a particular price in the market.
Supply Schedule and Supply Curve
The supply schedule is a table that shows the different quantity of commodities offered for sale at the different price, at a given time.
Supply Curve is a graphical representation of the supply schedule. It shows a direct relationship between price and supply. Supply curve slopes upward from left to right.
Individual supply schedule
It is the tabular form that represents the amount quantity an individual firm is willing to sell at a particular price in the market
Individual supply curve
It refers to the graphical representation of an Individual supply schedule.
Market Supply schedule
It is the tabular form that represents the amount of quantity all the firms are willing to sell at a particular price in the market.
Market supply curve
It refers to the graphical representation of market Supply schedule
Determinants of Supply
Price – price is the basic determinant of supply. Change in price will affect the supply. There is a direct relation, the higher the price, the higher the quantity supplied and vice versa.
Goal/objective of the firm – the firm objective can be profit maximization, sale maximization or risk minimization. In the case of profit maximization, the higher the profit higher will be the quantity supplied.
Related goods price – supply is affected by related goods especially substitute goods. The change in price will affect the firm to change the quantity supplied.
A number of firms – Under perfect competition, the supply of the commodity is higher than under monopoly.
Factor Input price – The inputs like labor, raw material, etc affects the cost of production which leads to a change in quantity supplied. Higher input price lowers the supply.
Technology – Improvement in technology leads to an increase in quantity supplied.
Government policy – supply of a commodity is affected by the change in government policies.
For more details on the elasticity of supply and shift and movement in supply. Click Economics class 12
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