Supply of a commodity refers to the various quantities of a commodity which a seller is willing and able to sell at different prices in a given market, at a point of time, other things being constant. Price of commodity is affected by the demand and the supply.

Law of Supply

Law of Supply

"As the price of the commodity rises, its supply increases and as the price falls, its supplies declines". Thus the quantity offered for sale is directly proportional to price i.e. larger the supply, higher the price or vice-versa as shown in the figure, other things remain same.


Increase and Decrease in Supply

This means a change in quantity supplied without any change in price. This therefore indicates a shift in supply schedules to the right with increase in supply and to the left with decrease in supply.

Determination of Price

Prices under perfect competition are determined by the laws of demand and supply. Prices will be fixed at a point where the supply and demand are at equilibrium. The equilibrium will change by changes in forces of demand and supply.

Next Chapters

Estimating Procedure
Difference between Estimating & Costing
Depreciation & Obsolescence
Material Cost Calculation
Calculating Labor Cost
Direct and Indirect Expenses
Component Cost
Machine Shop Estimating
Forging and Forging Types
Starting an Organization
Welding Cost Estimation
Jigs and Fixtures
Qualities of an Entrepreneur
Starting Small Scale Industries
Budget and Budgetary Control
Supply & Law of Supply
Exchange and Barter Exchange
Classification of Market
Money and Types of Money
Trade Cycle
Break Even Analysis
Financial Management

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