- DEFINITION OF SUPPLY
Supply is refer to ability and willingness to sell specific quantities of goods in a given period of time at a particular price.
Willingness + ability to sell
- LAW OF SUPPLY
Positive relationship between product and quantity supplied.
When the price of the product increase, quantity supplied of that product will be increase.
When the price of the product decrease, the quantity supplied of that product will be decrease.
- SUPPLY SCHEDULE AND SUPPLY CURVE
INDIVIDUAL SUPPLY AND SCHEDULE FOR SUGAR
| COMBINATION |
PRICE (RM)
|
QUANTITY (UNITS)
|
A
|
P1
|
Q1
|
B
|
P2
|
Q2
|
C
|
P3
|
Q3
|
SUPPLY CURVE FOR SUGAR
- INDIVIDUAL SUPPLY AND MARKET SUPPLY
Individual supply- Relationship between the quantity of a product supplied by a single seller and its price.
Market supply- Relationship between the total quantity of a product supplied by additional all quantities supply by all seller in the market and its price.
MARKET SUPPLIED IS THE COMBINATION OF INDIVIDUAL SUPPLY
Individual supply 1 + Individual supply 2 = MARKET SUPPLY
PRICE OF THE RELATED GOODS
v SUBSTITUTE GOODS
SUPPLY OF A PRODUCT WILL DECREASE IF THERE IS AN INCREASE IN THE PRICE OF A SUBSTITUTE PRODUCT. MAXIS AND CELCOM
v COMPLEMENTARY GOODS
AN INCREASE IN THE PRICE OF A PRODUCT WILL INCREASE THE SUPPLY OF A COMPLEMENTARY PRODUCT. PETROL AND CAR
v COST OF PRODUCTION
WHEN THE COST OF PRODUCTION INCREASE, QUANTITY SUPPLIED WILL BE DECREASE AND VICE VERSA
v EXPECTED FUTURE PRICE
IF THE SELLER WAS EXPECTING THE PRICE WILL INCREASE IN FOLLOWING MONTH, THE CURRENT QUANTITIES SUPPLIED WILL BE DECREASE AND VICE VERSA.
v TECHNOLOGY ADVANCE
CHANGES IN TECHNOLOGY ARE THE MOST INFLUENCES ON SUPPLY. EXISTANCE OF THE NEW TECHNOLOGY WILL REDUCE THE COST OF PRODUCTION. SO THE SELLER CAN INCREASE THEIR PRODUCTION.
v NUMBER OF SELLERS
THE LARGE NUMBER OF FIRMS SUPPLYING A PRODUCT, THE LARGE QUANTITY SUPPLIED OF THE PRODUCT AND VICE VERSA.
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