Economics for Common People – Part 5 Understanding Supply
1️⃣ What Is Supply?
Supply refers to the quantity of a product that producers are willing and able to sell at a given price.
Supply depends on both willingness and ability to sell.
If a farmer has rice but does not want to sell it at the current price, it is not considered supply.
2️⃣ Relationship Between Price and Supply
Generally, when the price of a product increases, supply increases.
When the price decreases, supply decreases.
This is called the Law of Supply.
3️⃣ Real-Life Example
Suppose the price of tomatoes increases.
Farmers will try to sell more tomatoes in the market.
If the price falls very low, farmers may reduce supply.
Higher price → Higher supply Lower price → Lower supply
4️⃣ Factors Affecting Supply
Supply does not depend only on price.
- Cost of production
- Technology
- Number of producers
- Government policies
- Future expectations
For example:
If production costs increase, supply may decrease.
5️⃣ Individual Supply vs Market Supply
Individual supply is the supply of one producer.
Market supply is the total supply of all producers in the market.
Market supply determines total availability of goods.
Supply represents the producer’s side of the market. It responds positively to price changes.
— Shaktimatha Learning
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