Define supply. Explain three reasons for the rightward shift of the supply curve.
Definition of Supply:
"Supply refers to the quantity of a commodity offered for sale at a given price in a given market at a given time."
In simple words, supply means that quantity of a particular commodity which a seller is ready to sell at given price. It is the price which vitally affects the supply of goods.
The rightward shift of the supply curve denotes the increase in supply. Increase in supply is a situation when quantity supplied increases due to the favourable changes in factors other than price.
The reasons for rightward shift of the supply curve are as under:
(1) Fall in the price of factors of Production: When prices of factors of production (wages, cost of raw material etc.) decreases, it increases the profit margin of producer/seller which induces him to increase the supply.
(2) Increase in the number of firms in the Market: When new firms enter into the market then total supply increases.
(3) When the firm expects a fall in the Price of the Commodity: If firms expects that in near future prices are going to be decreased then they increase their present supply at higher prices in order to fetch out more and more profits.
Definition of Supply:
"Supply refers to the quantity of a commodity offered for sale at a given price in a given market at a given time."
In simple words, supply means that quantity of a particular commodity which a seller is ready to sell at given price. It is the price which vitally affects the supply of goods.
The rightward shift of the supply curve denotes the increase in supply. Increase in supply is a situation when quantity supplied increases due to the favourable changes in factors other than price.
The reasons for rightward shift of the supply curve are as under:
(1) Fall in the price of factors of Production: When prices of factors of production (wages, cost of raw material etc.) decreases, it increases the profit margin of producer/seller which induces him to increase the supply.
(2) Increase in the number of firms in the Market: When new firms enter into the market then total supply increases.
(3) When the firm expects a fall in the Price of the Commodity: If firms expects that in near future prices are going to be decreased then they increase their present supply at higher prices in order to fetch out more and more profits.
