The aim of the programme is

to help youAIMhave a clear

understanding
of of the
concepts and theory of
THE PROGRAMME
supply and assist you
analyse the real life issues
based on the knowledge you
will gather from this
programme.
■ Define the concept of supply of a
commodity
■ Describe the determinants of supply of a
commodity
■ Explain the relationship between price
of the commodity and the quantity
supplied of the commodity
■ Explain the law of supply
■ Draw the supply curve from a supply
schedule.
■ Explain the reasons of the shifts of and
movements along a supply curve.
■ Draw the market supply curve from
individual supply curves.
■ He/she
The makesisitwilling
producer available
able to to for sale
produce
produce
I want to grow
paddy on this
land
 I want to
■ The producer is cultivate
willing to produce paddy on
this land

■ The producer is
able to produce

■ He/she makes
it available for
sale
 ■ The producer is
willing to produce
the commodity
fazlu mia
Liton
■ The producer is
able to produce the
commodity
■ He/she makes the
commodity available
for sale
Determinants of the supply
of a commodity
■ Price of the commodity
■ Prices of the factors of production
■ Weather
■ Expected future price
■ Goal of the firm
■ Prices of other goods produced
■ Sate of technology, etc
 Law of Supply
Remaining all other things
same, if the price of a
commodity rises, the quantity
supplied of the commodity
increasesP Q
And if the price of the
commodity falls, the quantity
supplied of the commodity
decreases.P Q
 How Can the Relationship Between
Quantity Supplied and Price Be Portrayed?

Three methods are usually used to do that

Numerical
Function
data Graph
Supply
Supply Supply curve
Function
schedule
SUPPLY FUNCTION
Supply function shows the relationship between quantity
demanded and it determinants. We can show that by the following
supply equation:

Here, QXS = Quantity supplied of commodity X , PX = Price

of commodity X, W = Money income of the consumer, Inputs =
Price of inputs, PE = Expected future price, G = Goal of the
firm.

This equation reflects the theme of the law of supply.

Supply Schedule
Quantity
Price of supplied of
Potato Potato
(Tk/Kg) (Kg)
5 3
7 5
10 8
13 10
15 15
 Rightward
Leftward SHIFT
SHIFT ofof Weather
Expected
Movement along
Price (P) What does supply
the supply
the supply curve
curve Weather
the supply curve
curve show?S2 S0 future price
Prices of
E isgets
low worse
inputs
15 P=13, S1
Q=10 Expected
D
13 price,
Own price
GP=7, etc.
10 Q=5
C
F
of the
S2 Every
Upward commodity
point on the
slopping
B
7 supply increases
i.e., There isshows
a direct relationship
the price
A between
and price and quantity
the corresponding quantity
supplied of
supplied of the
the commodity
commodity
5 S1
S0

0 3 4 8 10 15 Quantity (Q)
5
 Cause Effect
Tax
New on
Factor
Expected
Weather
Own price Rightward
Leftward
Movement shift ofof
shift
along
input
prices
future
goes upprices
technology
has
price
bad the
the supply
supply curve
curve
rises
is invented
gone
lowup
P S1
S0
S1

S1
S0 S1
Q
0
 Quantity supplied Market
Price (Kg) supply
(TK.) Seller-01 Seller-02 (A+B)
(A) (B)
2 2 1 2+1=3
4 5 3 5+3=8
6 8 6 8+6=14
7 10 8 10+8=18
 Seller-1 Seller-2 Market Supply
s1 s2
S
B
6
Price

A
4

s1 s2 S

0 5 8 0 3 6 0 8 14
Quantity Supplied
 CONSUMER SURPLUS
Price WHOLE MARKET
12

lus er
rp m
D

su nsu
10
Co

lus r
rp ce
S'

su odu
8

6 Pr
E
4 Market price

2
D'
0 S
1 2 3 4 5
Quantity of Patty (in Thousands)
What we have learnt from this
programme?
■ The concept of supply
■ The determinants of supply of
a commodity
■ The law of supply
■ How to draw the supply curve
from a supply schedule.
■ The reasons behind the shifts
of and movements along a
supply curve.
■ How to draw the market
supply curve from the
individual supply curves.
Question for brainstorming
If government
the
Remainingproduction
all

3
21
withdraws
of ricethings
other subsidy
is hampered
on fertilizer,
due to severe
unchanged, ifwhat
the
changes
draught,
price will
what
of rice occur
will
with
be itsthe shape
impact
increases, how or
onit
the position
will supply ofofrice
the
affect quantity
supply
of curve
the country?
supplied of
of rice?
rice?