Economics

Supply, Supply Curve and Law of Supply

len Alfred Ajibola - Fri, 26th April, 2019 @ 20:38: PM

Topics in Economics

Advantages of Inflation Disadvantages of Inflation Concept of Inflation in Economics Scheme of work for Economics, SS1, First Term Scheme of work for Economics, SS1, Second Term Scheme of Work for Economics, SS1, Third Term Functions of the Wholesaler Advantages and Disadvantages of the Wholesaler Wholesale Market: Who is a Wholesaler? Characteristics of the Wholesaler Retail Market: Who is a Retailer and Examples of Retailers Market: Types of Market Market - What is a Market in Economics? Elasticity of Supply: Types of Supply Elasticity Supply Elasticity: Elasticity of Supply explained Demand Schedule - Types of Demand Schedule Demand: What is Demand? Law of Demand Concept and Types of Cost Supply, Supply Curve and Law of Supply What is a Black Market, Its advantages and disadvantages


Academic Questions in Economics

Please check out our Test Your Knowledge page to see all Questions and Answers

A _____ market provides a platform whereby job seekers link up with employers in an attempt to be hired.

  • A. Wholesale market

  • B. Bond market

  • C. Physical market

  • D. Virtual market

  • E. Factor Market

  • F. Labor Market

Which of the following is not a type of market based on commodities bought and sold?

  • A. Wholesale market

  • B. Bond market

  • C. Physical market

  • D. Virtual market

  • E. Factor Market

  • F. Labor Market

According to economists, a market refers to a/an _____ comprising of various buyers and sellers carrying out business transactions.

  • A. Place

  • B. Location

  • C. Entire area

  • D. Online platform

  • E. Avenue

  • F. Axis

Primary market is a type of market based on _____.

  • A. Market structure

  • B. Demand

  • C. Supply

  • D. Commodities bought and sold

  • E. Channel of distribution

  • F. Internet and world wide web

Pice elasticity of supply - Len Academy

The above diagram on the quantity supplied against a change in price is _____.

  • A. Elastic

  • B. Inelastic

  • C. Perfectly Elastic

  • D. Perfectly Inelastic

  • E. Zero Elastic

  • F. Unitary Elastic

The rate at which an increase in the price of a product translate into the product's increased production and availability in the market is termed _____.

  • A. Demand

  • B. Supply

  • C. Demand Elasticity

  • D. Supply Elasticity

  • E. Demand Curve

  • F. Supply Curve

Concerning demand curve, which of the following statement is incorrect?

  • A. It is a graphical represention of a table showing the price of commodities and quantity demanded

  • B. It can be an individual demand curve

  • C. The x-axis shows the price of commodities

  • D. The price and quantity demanded are expressed on different axis of the graph

  • E. It can be a market demand curve

  • F. All the options are correct

A table that shows the price of a commodity and the quantity demanded is termed _____.

  • A. Price table

  • B. Demand table

  • C. Demanded-price table

  • D. Demand preference table

  • E. Demand graph

  • F. Demand schedule

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What is supply?

Supply can be defined as the amount or quantity of goods and services a producer or manufacturer or supplier intends to sell at a given time and period.

Consider the instance below:

A producer of rice may plan to sell a bag of rice for N10,000.

The quantity of rice sold by the producer over this period of time will depend on the price of his or her rice, in addition to other factors. Such additional factors may include:

  1. The quantity of rice in the market.
  2. The quality of his rice.
  3. The price substitute of rice.
  4. The demand of rice at that present moment and so on.

Please read on the Graphical Representation of Supply Curve here.

Note: Quantity supplied refers to the amount or number of goods supplied and services rendered.

 

Supply Curve

Supply Curve -Len Academy
Image Credit: Economics Help

Supply curve is the graph that shows the correlation between the amount or quantity of goods supplied and its price over a given period of time.

Please read on the Elasticity of Supply here.

In a supply curve, the quantity of goods supplied is always on the horizontal axis while the price is seen on the vertical axis.

Oftentimes, before we plot a supply curve (graph), we would have a table that contains the observable data showing a prior listings of the price and quantity of goods supplied. Such a table is known as the supply schedule.

Please read on Demand Schedule here.

When the price versus quantity supplied is plotted on a supply curve graph, we will notice an upward sloped graph from left to right. This upward and left to right movement of the supply curve validates the law of supply which states that:

The suppliers are willing to offer or sell more quantity of their goods at a higher price provided all other factors are kept constant.

Law of Supply

Please read on Demand and Law of Demand here.

Note: When other factors (not relating to price) that affect the quantity of goods supplied are present, the supply curve may shift to the right or left. Below are some instances:

  1. The availabiity of better seeds or a new pest resistant seed will increase the supply of crops from such seeds, hence; supply curve will shift to the right.
    Please read on the Types of Supply Elasticity here.
  2. Natural disasters like earthquakes and droughts will shift the supply curve to the left.
  3. You can read on Soil Erosion here.

  4. Increase in the price of a substitute crop will shift the supply curve to the right.
  5. If the price of a crop will increase in the future, the supply curve will shift to the left because manufacturers and producers will prefer to sell such crop in the future.
  6. An increase in labour will shift the supply curve to the left.
  7. Please read on Division of Labour here.

  8. Any technology that will boost the amount of crop produced or the number of services rendered will shift the supply curve to the right.
  9. You can read on the Internet of Things here.

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Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.


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Amazing facts in Economics


NOTABLE POINTS IN Economics

Below are definitions of demand from the perspective of some notable professors:

The demand for goods is a schedule of the amounts that buyers would be willing to purchase at all possible prices at any one instant of a time.

Professor Mayers

Demand is the various quantities of goods that would be purchased per time period at different prices in a given market.

Professor Hibdon

The demand for anything, at a given price is the amount of it which will be bought per unit of time at the price.

Professor Benham

Generally, demand is defined as the willingness of a person, buyer or consumer to buy a specific quantity of goods or service at a given price and time.

From the above definitions, we can infer that the definition of demand is referenced to three major factors. These are:

  1. Quantity of Goods Demanded

  2. Price

  3. Time

Please read more on the concept of demand here.

In economics, we have various types of cost. These are:

  • Accounting cost

  • Economic cost

  • Outlay cost

  • Opportinity cost

  • Fixed cost

  • Variable cost

  • Direct cost

  • Indirect cost

  • Sunk cost

  • Incremental cost

  • Private cost

  • Social cost

Please read the explanations on the aforementioned types of cost here

A Black market is said to take place when there is illegal buying and selling of goods and services.

Black markets usually take place outside the government's rader and without government's knowledge so as to avoid tax or any other government regulations.

Black market presents the avenue for government prohibited goods like hard drugs, war weapons and firearms to be bought by criminals.

A black market can also occur on the web for cyber criminals or those who are involved in computer hacking. To achieve their malicious aim, these individuals will go into the dark web and purchase or rent their respective hacking tools for a fee. Normally, payments are made in crypto currencies.

However, a black market isn't generally considered as bad. Infact, it has its advantages and disadvantages.

Please read more on black market here

Below are some advantages of black market:

  • Goods and services are sold at a cheaper price.

  • It helps some people make plenty of money.

  • The illegal sales of human organs, for example, the sale of human kidneys have aided in saving some lives.

  • Some people actually depend on black market for their daily bread.

  • Some of the proceeds from black market may be utilized towards the economic growth of a nation. For instance, schools and hospitals had been built with money made from black market.

The law of supply states that:

The quantity of the supplied services or goods will increase as the price increases and they will decrease as the price decreases provided all other factors remain constant.

These constant factors are very important when stating the supply law. They include:

  • The price of input resources

  • The kind of technology used during production

  • The number of suppliers

  • The number of buyers; and so on.

 

A graph that shows the relationship between the price of a product or service, and its quantity supplied is the supply curve.

Supply curve can be defined as a graphical representation of the direct relationship between the prices of goods and services and the quantity supplied (of such goods and services) within a particular period of time provided all other factors remain constant.

Len Academy - Supply CurvePlease read more on the law of supply and supply curve here