Understanding: Market Supply Curves Video Lecture | Economics Class 11 - Commerce

hi there welcome to an AAS level of
microeconomics topic video looking at
the difference between individual supply
and market supply the key difference is
this that individual supply refers to
the supply capability individual
producer in the market at each price
level whereas market supply is the sum
of the individual supply schedules or
individual supply curves of the all the
producers in the industry there was
market suppliers fill out the
aggregation of the supply schedules of
all of the individual producers so
supply is the quantity of a good or
service that producers are willing and
able to bring to the market the given
price in a given time period and the
basic law of supply be it mass
production of beers or chocolates or
motor cars or Airlines is that there's
the price of the product goes up
typically businesses to expand their
production in the market to meet demand
so both the individual and the market
supply curve show a relationship
normally a positive relationship between
the market price and how much firms are
willing and able to sell of course the
key to understanding this is the nature
of cost in the market cost normally
arise as supply increases and also the
profit motive that producers are
motivated by supplying products to the
market generating a revenue getting the
best price they can for their product
and earning a return for the owners so
typically for example the market supply
curve and the individual supply curve
for a product slopes up widths from left
to right if the price of coffee goes up
then coffee producers other things being
the same might try to expand their
production to meet demand of course the
change in the price of coffee causes a
movement along the supply curve other
factors the so called conditions of
supply caused a shift in the supply
curve the market supply is the
aggregation of the total of supply
bought to the market by producers at
each price and to calculate market
supply we work out the the sum of the
individual therm supplies to
here's a simple example price 10 pounds
in the market for American supply 30
from cecum supply fire but Furby may may
have high costs and may not be willing
and able to supply anything to the
market at price 10 so the market
suppliers 35 Furby comes into the market
at price 20 both firma and firmb see
supply more and you can see that the
market supply get up to 70 when the
price rises to 20 so market supply is
simply the horizontal sum of what firms
are willing and able to bring to the
market at a given price key revision
point key evaluation point is a supply
is not necessarily the map that's
actually sold because of course there
may be some stocks maybe the current
level of demand is less than the current
level of production so that's market
supply of course there many many factors
that could cause a shift in both the
supply of an individual producer and the
supply of producers as a whole in the
market the keys aren't understanding
suppliers to understand the changing
nature of of costs wouldn't unit cost go
up supply falls when unit costs go down
for given price producers could supply
more many factors affect supply the
exchange rate affects the price of
components of more materials production
technologies should normally shift this
if I go out with the number of producers
in the market will affect the market
supply as new firms come in the market
supply will shift out oftentimes supply
affected by the climatic conditions so
extreme weather events can of course
hamper supply beat drought or flooding
tsunamis and earthquakes etc and
governments in theory of course can
intervene in markets and affect supply
India attacks on a producer causes an
image shift of supplier subsidy causes
an outward shift regulations which
increase cost can cause an inward shift
these are some of the key causes of
shifts in the market supply of a product
well to illustrate the difference
between individual and market let's take
a fascinating industry then sure it's
growing pretty quickly
particularly in the UK and especially in
the United States that craft beer
industry I'm giving you this
presentation I really warm summer's day
and I could do with a beer but I'll
finish my presentation first my craft
beers are produced typically by small
independent Brewers
so they don't necessarily have the big
economies of scale of the industrial
beer conglomerate businesses but they
use a lot of hops and particularly have
a distinctive taste am i selling you
this okay craft beers typically produced
by small producers so they'll be
affected by supply conditions one of
which is the price of hops there's an
article from The Guardian just a few
days ago saying that the the price of
hops is rising they very quickly there's
been a supply shortage and because craft
beers use more hops than normal lagers
that's going to affect their supply
conditions quite adversely and the
production may stall because they run
out of hops to use generally speaking
the craft beer industry in the world has
grown very quickly this chart shows the
countries in the world with the most
craft brewers in other states way out
ahead but the UK comes in second with
over 700 craft beer makers including
businesses such as buddha' so in fact in
the UK the market supply of craft beer
has increased quite rapidly year-on-year
and one way of measuring it is to think
about the industry supply the production
volume as you can see it's been growing
pretty strongly that's both individual
producers supplying more beer to meet
demand and of course the arrival
emergence of new producers into the
market individual and market supply
quite an important distinction to make
and hopefully this video has helped to
explain it to you thank you