Concept of Supply,law of supply exception to the law of supply..

Supply 

 Supply meaning...

   Supply is the amount of a product that a producer is offering for sale at a given price during a given period of time.A store or amount of something that is provided is supply.

Supply means the amount of good that is available for sale.

Supply v/s Stock

Stock means total goods available to the producer or manufacturer but supply is part of stock which is provided for sale for eg suppose manufacturer manufacture 1000 units of suits but he is offering only 800 goods for sale at a given price so 800 is supply and 1000 is stock.

Supply Function..

It explains the functional relationship between supply of a commodity and the determinants of the supply.

           Supply of a commodity by a firm depends on price of the commodity itself, prices of other commodities, State of technology,cost of factors of production, objectives of the firm etc.The relationship between the quantity supplied and it's determinants is called the supply Function.This can be expressed mathematically as Sx=f(Px,Po,T,F,G...)

Law of Supply..

Other things remains constant, supply increases with a rise in the prices and deceases with the fall in prices there is direct relationship between price and the supply of a commodity.In other words,other things remaining the same, when price of a commodity rises ,it's quantity supplied increases and when the price decreases, quantity supplied also decreases.Thus , keeping all the determinants constant (except price of the commodity) a positive relationship between the price and supply.

Px.   Quantity supplied.

5.     30

6.      40

7.       50

8.        60 

 

Law of supply..

Shape of supply curve (Positively Sloped).

A  curve is said to be positively sloped or upward sloping when it represents relationship between two variables in which increase in value of one is associated with increase in the value of other variable and vice- versa .

Reasons for operation of the law of supply:

🖊️The rise in the price of the commodity causes rise in profit .As a result producers produce more quantity of the commodity to increase their amount of profit.

🖊️A rise in the price of the commodity induces the sellers to dispose off at least a part of their stock .The contrary happens when there is a fall in the price of the commodity.

🖊️A rise in the price causing higher profit attracts the new firms to enter the market and this adds to the supply of the commodity.

Exceptions to the Law in Supply:-

The law of supply i.e lesser supply of the commodity at lower price and more supply at Higher price does not apply in every case and situation the circumstance when the law of supply become ineffective is known as exception to the law sum of these important exceptions are as under...

1) Exceptions of further change in prices-the law does not apply if there are future expectation for further change in prices for example if sailors expect further fallen prices in future they would be ready to sell more right now even at low prices and vice versa.

2)In case of agricultural goods-the supply of agriculture goods depends more on natural factors such as amount of rainfall fertility of the soil and natural calamities etc and less on their prices.

3)In case of perishable goods -the supply of perishable goods like milk vegetables fish eggs etc is also not affected by their prices seller cannot hold these goods for long.

4) Goods of auction -the law does not apply in case of goods of auction because their supply is always limited and fixed which cannot be changed it all even though there is the change in prices.

5) Disposal of old stock -when sailor in 10 to clear of their old stock of goods they would like to sell more goods by reducing their prices.

6) In case of antique items -in case of some precious and rare goods also the law of supply does not apply artistic goods of high quality and poems written by top class poets fall under this category their supply cannot be increased even when their prices rise.