Question

Distinguish between the following:

i. Stock and Supply

ii. Individual Supply and Market Supply

iii. Extension and Contraction of Supply

iv. Relatively Elastic Supply and Relatively Inelastic Supply

v. Average Revenue and Average cost

Answer 1

i.

Stock	Supply
It is defined as the amount of goods that are available with the seller for sale in the market at a given point in time.	It refers to different quantities of a commodity actually offered for sale at different prices.
It includes previous stock and current stock.	It includes only current supply.
It is equal to, or more than, supply	It cannot exceed, or be more than, stock.

ii.

Individual Supply	Market Supply
It represents the quantities supplied, at different prices, by an individual firm or producer.	It represents the aggregate quantities, supplied at different prices, by all the firms or producers.
The individual supply curve is relatively steeper.	The market supply curve is relatively flatter.

iii.

Extension (or Expansion) of Supply	Contraction of Supply
It implies that when the price of a good rises, holding other factors constant, the quantity supplied of the good rises.	It implies that when the price of a good falls, holding other factors constant, the quantity supplied of the good falls.
It is represented by an upward movement along the supply curve.	It is represented by a downward movement along the supply curve.

iv.

Relatively Elastic Supply	Relatively Inelastic Supply
In this case, change in price leads to a proportionately large change in the quantity supplied.	In this case, change in price leads to a proportionately minor change in the quantity supplied.
It represents a flatter supply curve.	It represents a steeper supply curve.
Here, Ed> 1	Here, Ed< 1

v.

Average Revenue	Average Cost
It is defined as the revenue earned, per unit of output sold.	It is defined as the per unit cost of producing output.
$AR=\frac{TR}{TQ}$	$AC=\frac{TC}{TQ}$