Meaning: -It indicates various quantity of
a commodity that all sellers are willing to sell in the market at various
prices and at different times.
There are various factors that influence the
supply of a commodity in the market. The factors or determinants that influence
market supply are a follows:
1.
Price of the
commodity:
The supply of a commodity is directly related to its price. Generally, more
quantity of a commodity is offered for sale at higher price, and less quantity
is offered for sale at a lower price.
2.
Availability of
inputs: -The
supply is affected by the availability of inputs for production. If there is
shortage of inputs in the market, the production would be less, and therefore,
the supply would be lower.
3.
Cost of production:- A rise
in production cost may reduce the supply in the market, especially, when higher
costs are not viable (possible), and a fall in production cost may induce the
producer to produce more and accordingly supply more in the market.
4.
Nature of the Market: -Supply
of a commodity is influenced by the nature of a market. In a highly competitive
market, the supply may be higher. In a monopoly market the supply may be lower.
5.
Distribution
Facilities: -The supply is influenced by distributionfacilities.
For instance, if there is a good network of transport and warehousing
facilities, the supply can be more and vice versa.
6.
Nature of Workforce:-The supply
is influenced by the nature of workforce available to the producers. If
the workforce is competent and dedicated, then the production would be higher,
7.
Technology: -
The type of technology used by producers influences the production. Modern
technology not only improves the quality, but also the quantity of production.
8.
Size of the Market: -The size
of the market greatly influences the supply. Larger the size of the market,
there will be more production, and more will be the supply and vice versa.
9.
Future expectation: -Expectations about the
future price will affect the supply. If the price is expected to rise in
the future, the producers may hold on to the stock, rather than supplying it in
the market. This will reduce the supply in the market for the time being.
