Question

MBA - Managerial Economics

Discuss briefly the supply schedule and the various factors affecting the supply in the market.

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Answer 1

A supply schedule is a table that represents the price of a particular commodity and the quantity supplied corresponding to that price level. The supply scheduks shows the relationship between quantity supplied and prices. This relationship is positive, that is, an increase in price of a commodity will increase the supply of that commodity and vice-versa.

There are various factors that affect the supply of a commodity in the market.

1. The price of that commodity. An increase in price of that commodity will increase the quantity supplied and vice-versa.

2. Cost of production - a reduction in the production cost increaaes the supply and an increase in production cost decreases supply.

3. Technology- an improvement in level of technology increases production and supply.

4. Government policies such as taxes and subsidies both impact the supply. Increase in taxes adversely affect the supply and increase in subsidies favorably affect the supply.

5. An increase or decrease in the supply of related good also increases or decreases the supply.

6. Other factors such as weather, taste and preferences also affect the supply of the commodity