Derivation of Market Supply Curve |
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| Ans : (i) Market supply schedule
Ans:- it is a table that show various quantities of commodity that all the seller are able and willing to offered for sale of different prices at a particular period of time and place. A market supply schedule is presented below:-
Price (Rs.) Supply ‘A’ Supply ‘B’ Market supply
1
10
5
10+5=15
2
20
10
20+10=30
3
30
15
30+15=45
4
40
20
40+20=60
5
50
25
50+25=75
In the above table, at initial price Rs.1 supply of firm it is 10 units and supply of firm ‘B’ is 5 units. Therefore, market supply is 10+5=15 units. When price increases to Rs.2, supply of firm ‘A’ increases to 20 units and supply of firm ‘B’ increases to 10 units. Therefore market supply is 20+10=30 units and so on. There is positive relationship between price and quantity supply. Therefore, when price increases quantity supply also increases.
(ii) Market supply curve
Ans:- It is a diagram that shows various quantities of a commodity that all the seller are able and willing to offered for sale at different prices, at a particular period of time and place. The market supply curve is presented below:
In this given diagram, ox-axis represents quantity supply and oy-axis represent price. At initial price Rs.1 supply of firm ‘A’ is 10 units and supply of firm ‘B’ is 5 units. Therefore, market supply is 10+5=15 units. When price increases to Rs.2 supply of firm ‘A’ increases to 20 units and supply of firm ‘B’ increases to 10 units. Therefore, market supply is 20+10=30 units and so on. There is positive relationship between price and quantity supply.
SA is the supply curve of firm ‘A’, SB is the supply curve of firm ‘B’ and SS is the market supply curve which slopes upward from left to right. It shows that when there is increase in price there is increase in quantity supply.
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