Graphical representations[ edit ] Although it is normal to regard the quantity demanded and the quantity supplied as functions of the price of the goods, the standard graphical representation, usually attributed to Alfred Marshallhas price on the vertical axis and quantity on the horizontal axis. Since determinants of supply and demand other than the price of the goods in question are not explicitly represented in the supply-demand diagram, changes in the values of these variables are represented by moving the supply and demand curves often described as "shifts" in the curves. By contrast, responses to changes in the price of the good are represented as movements along unchanged supply and demand curves.
In economics, supply refers to the quantity of a product available in the market for sale at a specified price at a given point of time.
Unlike demand, supply refers to the willingness of a seller to sell the specified amount of a product within a particular price and time. Supply Increasing demand and supply of papad always defined in relation to price and time. For example, if a seller agrees to sell kgs of wheat, it cannot be considered as supply of wheat as the price and time factors are missing.
Similarly, if a seller is ready to sell kgs at a price of Rs. Apart from this, the supply also depends on the stock and market price of the product. Stock of a product refers to quantity of a product available in the market for sale within a specified point of time.
Both stock and market price of a product affect its supply to a greater extent. If the market price is more than the cost price, the seller would increase the supply of a product in the market. However, the decrease in market price as compared to cost price would reduce the supply of product in the market.
X has kgs of a product. He expects the minimum price to be Rs. Therefore he would release certain amount of the product, say around 50 kgs in the market, but would not release the whole amount.
The reason being he would wait for better rates for his product. In such a case, the supply of his product would be 50kgs at Rs. Supply can be influenced by a number of factors that are termed as determinants of supply. Generally, the supply of a product depends on its price and cost of production.
In simple terms, supply is the function of price and cost of production. Some of the factors that influence the supply of a product are described as follows: Refers to the main factor that influences the supply of a product to a greater extent. Unlike demand, there is a direct relationship between the price of a product and its supply.
If the price of a product increases, then the supply of the product also increases and vice versa. Change in supply with respect to the change in price is termed as the variation in supply of a product.
Speculation about future price can also affect the supply of a product.
If the price of a product is about to rise in future, the supply of the product would decrease in the present market because of the profit expected by a seller in future. However, the fall in the price of a product in future would increase the supply of product in the present market.
Implies that the supply of a product would decrease with increase in the cost of production and vice versa. The supply of a product and cost of production are inversely related to each other. For example, a seller would supply less quantity of a product in the market, when the cost of production exceeds the market price of the product.
In such a case the seller would wait for the rise in price in future. The cost of production rises due to several factors, such as loss of fertility of land, high wage rates of labor, and increase in the prices of raw material, transport cost, and tax rate. Implies that climatic conditions directly affect the supply of certain products.
For example, the supply of agricultural products increases when monsoon comes on time. However, the supply of these products decreases at the time of drought.
Some of the crops are climate specific and their growth purely depends on climatic conditions. For example Kharif crops are well grown at the time of summer, while Rabi crops are produce well in winter season.
Refers to one of the important determinant of supply. A better and advanced technology increases the production of a product, which results in the increase in the supply of the product. For example, the production of fertilizers and good quality seeds increases the production of crops.
This further increase the supply of food grains in the market. Refer to the fact that better transport facilities increase the supply of products. Transport is always a constraint to the supply of products, as the products are not available on time due to poor transport facilities.
Therefore even if the price of a product increases, the supply would not increase. In India sellers usually use road transport and the poorly maintained road makes it difficult to reach the destination on time the products that are manufactured in one part of the city need to be spread in the whole country through road transport This may result in the damage of most of the products during the journey, which can cause heavy loss for a seller.Shri Mahila Griha Udyog Lijjat Papad, India.
Shri Mahila Griha Udyog Lijjat Papad (Lijjat) is a cooperative established by Indian women that has developed a unique model for development and empowerment for low income female workers.
The price P of a product is determined by a balance between production at each price (supply S) and the desires of those with purchasing power at each price (demand D). The diagram shows a positive shift in demand from D 1 to D 2, resulting in an increase in price (P) and quantity sold (Q) of the product.
The supply and demand mechanism (the economic model) besides being the natural consequences of economic forces provides the most efficient economic outcomes possible.
Satisfaction for society is maximized, at minimum cost. Demand and Supply Papad manufacturing is primarily confined to the unorganised sector.
There are some national brands like Lijjat, Leher, Haldiram etc. but their products are costly and thus have limited market share. Bulk of the market is controlled by the local brands. Papad making business is often associated with the empowerment of women in India but in view of increasing demand and availability of machinery, it has now been developed in small-scale industry.
Increase in Both Demand and Supply An increase in demand and an increase in supply increase the equilibrium quantity. The change in equilibrium price is uncertain because the increase in demand raises the equilibrium price and the increase in supply .