Supply, Supply Curve and Law of Supply

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.

The term 'quantity supplied' refers to the amount or number of goods supplied and services rendered.

Supply Curve

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.

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.

When price is plotted against the quantity supplied in 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

It is important to state that 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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