Concept of Supply

In the general sense, supply refers to the production of a good. But supply in the economy is the quantity of goods that sellers are willing to sell in the market at a given time. The supply of any commodity is usually dependent on production. The supply of goods is affected by price and time. In the case of supply, it is considered an action or expectation with price only, considering other factors as fixed. So, Supply is the quantity that a seller or manufacturing company is willing to sell their product at a certain price at a certain time.

_{Image Source}

Difference between Supply and Stock

Many people make confusion supply and stock and they mix up both together. Supply refers to the quantity that a seller is willing to sell a product at a certain price. On the other hand, the total quantity of a saleable commodity is called stock. Supply is a part of stock. If the seller wants to ensure the supply of goods in the market, he will bring the goods from stock and sell them in the market. In short, Stock is the Potential Supply.

Law of Supply

There is a close relationship between the price of goods and the supply. In general, there is a correlation between the supply of goods and the price. That is, when the price of goods increases, the supply increases and when the price of goods decreases, the supply of goods decreases. The law by which the relation of functionality and dependence of supply to the price of goods is revealed is called the law of supply. In other words, if the price of a commodity increases at a certain time while the 'other things remain unchanged', the supply increases and when the price decreases, the supply decreases.

Here ‘Other matters’ refers to the materials used in production, like- production techniques, natural conditions, prices of related goods, time, number of producers, subsidies, etc.

_{Image Source}

Factors Influencing Supply

Depending on the supply of a commodity, the value of other commodities, the value of materials used in production, production strategy, taxes, subsidies, etc.

(1) Technical knowledge influences supply. If the technology is advanced and modern, the supply of more goods at the same price will be ensured.

(2) If the price of complementary or substitute goods increases, the seller or producer will start production of all those goods. As a result, the supply of these products will be reduced.

(3) It has a special effect on the supply of factors of production (such as land, labor, capital, etc.). If the price of factors of production increases, the cost of production will also increase. This will increase the price of the product. As a result, the supply of goods at the same price will be less.