Question

Define market supply. Explain the factor 'input price' that can a change in supply.

Answer 1

Market Supply refers to the graphical presentation of aggregate quantities supplied by all the firms or producers (plotted on the x-axis) and different prices (plotted on the y-axis) at which the quantities are offered for sale. In other words, it is the horizontal summation of the individual supply curves of all the firms in a market.
The input prices is a major factor which affects the supply. If the price of inputs increases, then the cost of production also increases, other things remaining the same. Due to the rise in the cost of productions, it becomes relatively lesser profitable for a producer to produce, consequently, lesser quantity is supplied at the given price. On the other hand, if the input prices falls, then the cost of production also falls, thereby, the producer supplies more quantities of output at the given price. Thus, change in the input prices negatively affects the supply of a product.