Meaning of Supply, Supply Function and Types of Supply

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Meaning of Supply

Quantities of the goods which are offered to be sold by the seller at a certain price, time in the market is called is supply.

In other words, supply is the willingness and ability of the producer’s to make certain quantity of output available to consumers at a given price over a time period.

 

In other-words, we can say that supply is a comparative term.

It is always mentioned in relation of price and time.

Supply without reference to price and time expresses no economic sense.

For example “the supply of milk is 1,000 liters” is meaningless in economic analysis.

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country

But, it is saying that A Dairy Farm supplies daily 1,000 liter of milk at Rs 80 per liter (₹ 60, $ 0.85). 

Here, both price and time are referred with the quantity of milk supplied; therefore, this data is meaningful in economic sense.

 

According to J. L. Hanson, “By supply is meant that amount that will come into the market over a range of prices.”

 

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Supply Function or Equation

Supply equation is the mathematical expression of relationship between supply for a commodity and its determinants.

Assuming other variable constant, we assume only the relationship between price of commodity and its quantity supplied.

So, there is direct relationship between price and quantity supplied of a commodity.

Simple supply equation can be written as:

S_?= a + b P_?

 

Where,  

S_? = Supply of commodity ?

P_? = Price of commodity ?

a = Autonomous supply

b = Slope of the supply

Since, there is direct relationship between price and quantity supplied by consumer, so the slope of supply curve (b) is positive.

 

Keep in Mind

Classification of supply

Supply can be classified into two categories; they are individual supply and market supply.

Individual supply

Individual supply is the small quantity of goods.

A single producer wants to supply at a particular price during a specific time in the market.

In economics, a single producer is known as a firm.

Market supply

Market supply is the large quantity of goods supplied.

Market supply is also known as industry supply as firms collectively constitute an industry.

All firms in the market want to supply at a particular price during a specific time in the market.

 

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Types of Supply

There are different types of supplies; some of them are given below:

Market supply

Market supply is also called very short period supply, day-to-day supply or daily supply.

Under these goods perishable goods like vegetables, milk, fish etc are included.

Supply is not made according to the demand of purchasers but as per availability of the goods.

 

Short-term supply

In short period supply, the demand cannot be met as per requirements of the purchaser.

The demand is met as according to the goods available.

 

Long-term supply

If demand has been changed, the supply can also be changed,

There is sufficient time to meet the demand in long-term supply.

The manufacturer produces goods and supplying them in the market.

 

Joint supply

Joint supply refers to the goods produced or supplied jointly like cotton and seed; mutton and skin (bone, wool also).

In joint supplied products, one is the main product and the other is the by-product.

By-product automatically outcomes when the main product is produced.

When the buffalo is slaughtered for mutton, skin and bone are obtained automatically.

 

Composite supply

The supply of a commodity is made from various sources and is called composite supply.

When there are different sources of supply of a commodity or services, it is known as composite supply.

Generally, we get light from electricity, gas, kerosene and candles.

All these resources make the supply of light.

 

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