Page 46 - VIRANSH COACHING CLASSES

4 Supply Analysis

Introduction : Supply is a flow concept. It refers to the amount
The study of supply is as important as of a commodity that the firms produce and offer

the study of demand. Supply is a fundamental for sale in the market over a period of time, say
economic concept that describes the total amount a day, a week, a month or a year.
of a specific good or service that is available to Stock Supply
a seller. The total amount of goods or services
available for sale at any specified price is known
as supply.

Concept of Total Output, Stock and Supply :
Total Output :
Output is produced in the process of
production. “Total output can be defined as
the sum total of the quantity of the commodity
produced at a given period of time in the Fig. 4.1
economy.’’ Production leads to consumption. In
the process of production inputs are converted Try this :
into output or final goods. Distinguish between stock and supply.

Stock : Definition of Supply :

Stock is the total quantity of commodity According to Paul Samuelson, “Supply
available for sale with a seller at a particular refers to the relation between market prices and
point of time. It is the source of supply. It is the amount of goods that producers are willing
potential supply. By increasing production, to supply.’’
stock can be increased. Without stock, supply Supply refers to the quantity of a commodity
is not possible. Normally, stock exceeds supply that a seller is willing and able to offer for sale
and it is fixed and inelastic. In case of perishable at a given price, during a certain period of time.
goods such as milk, fish etc. stock may be equal For example, a farmer's total output of rice is
to supply. On the other hand, for durable goods 4000 kgs. This is the total stock. If the price is `
such as furniture, garments etc. stock can exceed 40 per kg, he offers 1000 kgs for sale. This is the
the supply. actual supply.

Supply : Supply schedule :
Supply is a relative term. It is always A supply schedule is a tabular representation
expressed in relation to price, time and quantity. of the functional relationship between price and
quantity supplied of a particular commodity.
Meaning of Supply :
The word ‘supply’ implies the various 1) Individual Supply Schedule : Individual
quantities of a commodity offered for sale supply schedule refers to a tabular
by producers during a given period of time at representation showing various quantities
a given price. It is related to time and price. of a commodity that a producer is willing to

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