SS2 First Term Economics Lesson Note – Theory of Supply

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WEEK: 5

TOPIC: Theory of Supply

CONTENT:    

1. Definition, supply schedule, supply curve, law of supply
2. Factors affecting supply
3. Types of supply
4. Change in supply and change in quantity supply

Sub-Topic 1: Definition of supply

The supply of a commodity is the quantity of that commodity which sellers are willing and able to offer for sale at a particular price, at a particular period of time. It is different from the total stock of that commodity in existence or the total quantity of that commodity produced. It is only that part of the total production actually offered for sale at the ruling market price which constitutes the supply of the commodity.

SUPPLY SCHEDULES: A supply schedule is a table which shows the magnitude of supply at various prices. It is a table which shows the various quantities of a commodity which sellers are willing to sell at various prices, at a particular period of time. It has two aspects- the individual supply schedule and the market (total or aggregate) supply schedule.

LAW OF SUPPLY:   The law of supply states that “The higher the price of a commodity, the higher the quantity supplied or vice versa”

Sub-Topic 2: Types of Supply

• Joint or complementary supply
• Composite supply
• Competitive supply

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