Scribd Logo
Upload

Welcome to Scribd!

  • 878 views

    The Meaning of Supply

    Uploaded by

    Junar Alarcon
    The document discusses the meaning and determinants of supply. Supply is defined as the quantity of goods and services producers are willing and able to offer for sale at various prices over a given period of time. The key determinants of supply are: 1) Technology, as better technology allows for increased production; 2) Cost of production, as higher costs reduce the quantity supplied; 3) Number of sellers in the market, as more sellers means greater overall supply; 4) Prices of related goods, as producers may substitute to goods that are relatively more profitable; and 5) Price expectations, as producers may hold inventory if they expect prices to rise in the future.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd

    The Meaning of Supply

    Uploaded by

    Junar Alarcon
    878 views4 pages
    The document discusses the meaning and determinants of supply. Supply is defined as the quantity of goods and services producers are willing and able to offer for sale at various prices over a given period of time. The key determinants of supply are: 1) Technology, as better technology allows for increased production; 2) Cost of production, as higher costs reduce the quantity supplied; 3) Number of sellers in the market, as more sellers means greater overall supply; 4) Prices of related goods, as producers may substitute to goods that are relatively more profitable; and 5) Price expectations, as producers may hold inventory if they expect prices to rise in the future.

    Copyright

    © © All Rights Reserved

    Available Formats

    DOC, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses the meaning and determinants of supply. Supply is defined as the quantity of goods and services producers are willing and able to offer for sale at various prices over a given period of time. The key determinants of supply are: 1) Technology, as better technology allows for increased production; 2) Cost of production, as higher costs reduce the quantity supplied; 3) Number of sellers in the market, as more sellers means greater overall supply; 4) Prices of related goods, as producers may substitute to goods that are relatively more profitable; and 5) Price expectations, as producers may hold inventory if they expect prices to rise in the future.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    878 views4 pages

    The Meaning of Supply

    Uploaded by

    Junar Alarcon
    The document discusses the meaning and determinants of supply. Supply is defined as the quantity of goods and services producers are willing and able to offer for sale at various prices over a given period of time. The key determinants of supply are: 1) Technology, as better technology allows for increased production; 2) Cost of production, as higher costs reduce the quantity supplied; 3) Number of sellers in the market, as more sellers means greater overall supply; 4) Prices of related goods, as producers may substitute to goods that are relatively more profitable; and 5) Price expectations, as producers may hold inventory if they expect prices to rise in the future.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 4

    The Meaning of Supply

    Supply is the schedule of various quantities of commodities which

    producers are willing and able to produce and offer at various prices in a given

    time and place. In other words, supply is the amount of goods and services

    available for sale at given prices in a given period of time and place. Supply

    implies the ability and willingness of sellers to sell.

    Determinants of Supply

    1. Technology. This refers to the method of production or how something is

    produced. Having modern technology means being able to produce more. This

    means more supply. If producers had to rely on old technology which uses

    animals instead of machines, production would be slower. Better technology

    means more supply produced and less cost of producing these goods.

    2. Cost of production. This refers to the things a producer has to spend on to


    keep making goods and services. This includes: raw materials, laborers, bank

    loan interests, taxes, and land or building rent. An increase in cost of production

    makes it harder for the producer because he or she has to pay more to keep

    producing. This is why when the cost of producing goes up, the supply of goods

    most likely goes down.

    The producer, given a higher cost of production, cannot produce as much.

    Wage is a cost of production. Think of a factory. A factory needs workers. The

    owner of the factory needs to pay the workers so that they will help him or her

    make goods. Wage is a cost that the owner has to pay. It is the cost of making

    something. This means that if the owner has to pay more wage, the cost of

    production goes up. This means supply of the goods will go down.

    For example, businessmen don’t want to sell more goods if they are not
    sure that they will get as much money. If they have to pay workers more, that

    means less of their profit will stay with the owners. They have to give more of

    what they earn to the workers. What if sellers just increase price when cost of

    production goes up? Won’t this help them get more money? It might, but not all

    the time. Remember that higher prices mean less people will buy. This means

    that if the cost of production doesn’t go down soon, sellers will continue losing

    money. They might have to stop producing completely.

    3. Number of sellers. More sellers or more factories means an increase in

    supply. On the other hand, less sellers or factories means less supply.

    4. Prices of other goods. Since a price increase means less demand, a

    producer may choose to produce something else to continue gaining profit or

    to have more profit. Let us say, the price of rice goes up. If so, then a farmer

    may choose to produce more corn instead because he knows that less people
    will buy rice from him.

    5. Price expectations. If producers expect prices to rise very soon, they usually

    keep their goods and then release them in the market when the prices are

    already high.

    You might also like