what is market supply
THE SUPPLY OF GOODS AND SERVICES:
Market supply is the quantity of a good or service that all firms in a market are willing to sell, whereas a firm’s supply is the quantity that a particular firm within the market would like to sell. The relationship between the two is just that market supply is the sum of the supply of all the firms or producers in a market.
The market supply curve slopes upwards due to the business objective that we, as economists, assume all firms have; to make the biggest profit possible. Therefore, from this, a firm will only want to supply more of a good if it is possible to do so and hence the supply curve slopes upwards showing a direct relationship between quantity of supplied and price. This can be seen in the law of supply which states, ‘as a goods price rises, more is supplied’.
The conditions of supply are determinants of supply, other than the goods own price, that fixes the position of the supply curve. These include for example:
costs of production (wages, raw materials, energy, borrowing) technical progress taxes imposed on firms (VAT, excise, duties, business rate) subsidies granted by the government to firms
A supply curve may shift for reasons such as:
An increase in wages cost will shift the curve upwards as firms will reduce the quantity of the good they are prepared to supply because production costs have risen.
When technical progress occurs which will reduce production costs the supply curve shifts rightward.
When the entry of a new firm into the market occurs similar to the above happens and there is a rightward shift. The opposite would occur if there was a firm leaving the market.
Joint supply occurs when production of one good leads also to the supply of a by product. Whereas competing supply occurs when a good with more than one use is sold for the use which will make more money that the other. For example crop production sold not for food as they would not make as much money as if they
Market supply is the quantity of a good or service that all firms in a market are willing to sell, whereas a firm’s supply is the quantity that a particular firm within the market would like to sell. The relationship between the two is just that market supply is the sum of the supply of all the firms or producers in a market.
The market supply curve slopes upwards due to the business objective that we, as economists, assume all firms have; to make the biggest profit possible. Therefore, from this, a firm will only want to supply more of a good if it is possible to do so and hence the supply curve slopes upwards showing a direct relationship between quantity of supplied and price. This can be seen in the law of supply which states, ‘as a goods price rises, more is supplied’.
The conditions of supply are determinants of supply, other than the goods own price, that fixes the position of the supply curve. These include for example:
costs of production (wages, raw materials, energy, borrowing) technical progress taxes imposed on firms (VAT, excise, duties, business rate) subsidies granted by the government to firms
A supply curve may shift for reasons such as:
An increase in wages cost will shift the curve upwards as firms will reduce the quantity of the good they are prepared to supply because production costs have risen.
When technical progress occurs which will reduce production costs the supply curve shifts rightward.
When the entry of a new firm into the market occurs similar to the above happens and there is a rightward shift. The opposite would occur if there was a firm leaving the market.
Joint supply occurs when production of one good leads also to the supply of a by product. Whereas competing supply occurs when a good with more than one use is sold for the use which will make more money that the other. For example crop production sold not for food as they would not make as much money as if they