What is Supply ? - Supply Analysis, Business Economics & Finance Video Lecture | Business Economics & Finance - B Com

supply what do you think or what comes
to your mind when you think of supply
when I ask this question
students generally say supply is what is
getting sold supply means the total
sales in the market but that is right
supply means what is getting sold in the
market but supply is not restricted to
being what is sold in the market it is
something more than the goods or the
commodities that are sold in the market
supply actually means what a seller
offers to sell in the market what he is
offering in the market so this is
generally what we mean by supply let's
see what supply means as a definition
it's definition is supply is what
producers are willing and able to offer
now there are three important words in
this it is obvious that supply would be
from the producers end we have done
demand in our earlier videos demand was
focused from the point of view of a
consumer it is what consumers buy or
have the ability to buy or are willing
to buy but supply comes from the
producer side so supply is what
producers are willing and able to offer
I say there are three important words
first is willing second is able and the
third word this offer as I have already
explained you supply is not what is
actually getting translated into sales
but it is something which is being
offered for sale it may or may not get
sold if it gets sold it will add to the
sales of the producer if it does not get
sold it will remain in the stock of the
producer or the seller yet in both cases
we will say that the goods are being
supplied so first the producer should
have the willingness to offer it for
sale second the producer should be able
to sell those goods now what do you mean
by ability here ability of the producer
to sell the goods ability of the
producer is that there should be no
restrictions on sale the goods shall not
be encumbered by any charges he should
be free to sell them they should not be
government regulation
or encumbrances or charges on the but he
should be able to sell them first he
should be willing second he should be
able to sell them on offer to sell them
and finally it is the offer and not the
actual sales supply is what you offer
various prices
when we talk about the concept of supply
it is similar to the concept of demand
and demand we said demand is what
consumers are the quantity of goods the
consumers are willing and able to buy at
various price levels so demand is a
function of set of price levels and the
quantity demanded against those prices
in the same way supply is also a set of
price levels and the quantity supplied
at those levels for example if you are
talking about the supply of let's say
mobiles cell phones now if the cell
phone is priced at rupees 5000 the
quantity supplied for it is 1000 that
means one thousand units are being sold
at a price of five thousand if the price
increases to ten thousand the quantity
supplied increases to four thousand if
the price is increased to 15 thousand
the quantity supplied now increases to
ten thousand when the price is twenty
thousand the quantity supplied increases
to twenty thousand now what we can see
here is that different number of goods
are being supplied different amounts of
quantities of the cell phones are being
supplied at different price levels at
each price level
is a quantity that is being supplied
corresponding to it so supply is not
just the number of units applied at a
single price level but it is the unit's
applied at various price levels during a
given time now it is very important to
express supply given during a period in
the example given by me I've said the
mobiles are being supplied in the
example that I just gave I said 1,000
units or Mobile's are being supplied at
the price of five thousand four thousand
units are being supplied at a price of
ten thousand ten thousand units at a
price of 15,000 and 20,000 units at a
price of 20 thousand but during how much
time in a day in a month or in a year it
is imperative to suffix the time period
when we are stating supply otherwise the
meaning of supply becomes incomplete so
supply is nothing but the amount of
goods the quantity of goods that the
producers are willing and able to offer
at various price levels and during a
given period of time now let's
understand what are the properties of
supply first property I'll just erase
this
you
the first property is supply is offered
for sale and not actual sale we already
discussed this point supply does not
mean the goods that have actually been
sold it is just the goods that have been
offered for sale now when the goods are
offered for sale some of them may get
some of them may get sold and the others
may remain unsold in both the cases we
will say that the goods are being
supplied the second property is supplied
is a low concept and not a stock concept
by low concept we mean that supply is
expressed in the unit of time that is
particular commodities per day or number
of units per week number of units per
month number of units per year so it is
always expressed in the unit of time X
amount of units but X amount of time
when any variables when any elements are
expressed in the unit relative to time
we say that concept is a flow concept
what is the stock concept stock concept
is the absolute number of that concept
absolute number of that element or
variable now I'll just give you an
example V as accounts of V as commerce
students study accounts in accounts we
have prepared final accounts in final
accounts there are two things first is
the trading and P&L account
and second is the balance sheet please
understand that we prepare a balance
sheet as on a particular date whereas we
prepare the trading and P&L account for
the whole year
taken together so when we prepare a
balance sheet as on a particular day
those figures are absolute figures which
are outstanding as on that date so
balance sheet we term it as stop concept
however profit and loss account gives us
profit and that profit is for the year
so what we are doing here is we are
expressing profit in the terms of time
that is X amount of profit per year so
profit and loss statement becomes a low
concept
likewise GDP of a nation GDP of a nation
is a low concept we tend to measure how
much the GDP has increased how much the
GDP has fallen with relative figures of
the last year maybe with relative
figures of the past decade
so GDP is also expressed in terms of
time that is GDP for the year 2000 GDP
for the year 2011 GDP for the year 2012
and so on
you
so here also supply is a flow concept we
express supply at various price levels
and for a time period so supply becomes
a low concept