This presentation includes all the factors about Supply "The law of supply states that, other things equal, the quantity supplied of a good rises when the price of the good rises. "

1. Supply
How Markets
Work?
PRESENTED BY:
SURABHI PARASHAR (1924)
YUVNIKA SOGANI (1939)

2. SUPPLY
• Quantity Supplied refers to the
amount (quantity) of a good
that sellers are willing to
make available for sale at
alternative prices for a given
period.

3. Determinants of
Supply
• What factors determine how much ice
cream you are willing to offer or
produce?
Product’s Own Price
Input prices
Technology
Expectations
Number of sellers

4. Price
Law of Supply
– The law of supply states that,
other things equal, the quantity
supplied of a good rises when the
price of the good rises.

5. The Supply Schedule and
the Supply Curve
 The supply schedule is a table
that shows the relationship
between the price of the good and
the quantity supplied.
 The supply curve is a graph of
the relationship between the
price of a good and the quantity
supplied.
 Ceteris Paribus: “Other thing
being equal”

6. Table 4-4: Ben’s Supply
Schedule
Price of Ice- Quantity of
cream Cone ($) cones Supplied
0.00
0
0.50
1
1.00
2
1.50
3
2.00
4
2.50

7. Price of
Figure 1-2: Supply Curve
Ice-Cream
Cone
$3.00
2.50
2.00
1.50
1.00
0.50
0 1 2 3 4 5 6 8 10 12 Quantity of
Ice-Cream
Cones

8. Market Supply Schedule
• Market supply is the sum of all
individual supplies at each possible
price.
• Graphically, individual supply
curves are summed horizontally to
obtain the market demand curve.
• Assume the ice cream market has two
suppliers as follows…

9. Table 4-5: Market supply as
the Sum of Individual
Supplies
Price of Ice-
cream Cone Brand 1 Brand 2 Market
($)
0.00 + 0 = 0
0
0.50 0 0 0
1.00 1 0 1
1.50 2 2 4
2.00 3 4 7
2.50 4 6 10
3.00 5 8 13

10. Price of Inputs (Resource Prices)
• When costs go up, profits go down, so that
the incentive to supply also goes down.

11. Technology
• Advances in technology reduce the
number of inputs needed to produce a
given supply of goods.
• Costs go down, profits go up, leading to
increased supply.

12. Expectations
• If suppliers expect prices to rise in the
future, they may store today's supply to
reap higher profits later.

13. Number of Suppliers
• As more people decide to supply a good
the market supply increases (Rightward
Shift).

14. Price of Related Goods or Services
• The opportunity cost of producing and
selling any good is the forgone opportunity
to produce another good.
• If the price of alternate good changes then
the opportunity cost of producing changes
too!
• Example Mc Don selling Hamburgers vs.
Salads.

15. Taxes and Subsidies
• When taxes go up, costs go up, and
profits go down, leading suppliers to
reduce output.
• When government subsidies go up, costs
go down, and profits go up, leading
suppliers to increase output.

16. INCREASE AND
DECREASE IN SUPPLY

17. Increase in Supply

18. Decrease in Supply

19. EXPANSION AND
CONTRACTION OF
SUPPLY

21. Change in Supply vs.
a Change in the Quantity Supplied