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Case Studies Index

What is Supply?

Supply exists only when there is willingness and ability to produce and sell a product (good or service) or resource. It is a relationship between the quantity supplied and price of a product or resource. To be able to supply an item means one has; resources and technology to produce it; can profit from producing it; has made a definite plan to produce and sell it.
 
Determinants of Supply are; Price of the good (x); Price of related goods such as substitute goods (share inputs, e.g., plot of land) or complementary goods (jointly produced, e.g., beef & hides); Price of resources used to produce it such as land, labour, capital & entrepreneurship; Number of suppliers; Technology; and future expectations (on above)
 
a) Deriving an Individual Supply Curve (due to changes in price of good x)
The slope of the supply curve is only influenced by changes in price of the commodity in question (good x). In fig 5 and 6 below, the supply schedule provides changes in quantity supplied in response to changes in price. From fig. 5, we notice that the lower the price, the lower the goods sold.  When we plot these combinations we get the supply curve in fig. 6. This results in a movement along the supply curve referred to as change in quantity supplied.

outcomes
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