change in quantity supplied - Skyline E-learning site

CHANGE IN QUANTITY SUPPLIED AND CHANGE IN SUPPLY, A change in the quantity supplied of a commodity means a movement from one point to another on a supply curve. read about distribution channels here The cause of the change in the quantity supplied is as a result of the change in the price of the commodity under consideration. The quantity of a commodity supplied changes with price. More is supplied at a higher price than at a lower price. look at demand and supply laws here

The concept of supply and demand is one of the most fundamental principles in economics. Supply represents the amount of a particular good or service that producers are willing and able to offer for sale at a given price, while demand refers to the quantity of a good or service that consumers are willing and able to buy at a given price. The relationship between supply and demand is dynamic and can change based on a variety of factors. One such factor is a change in the quantity supplied, which occurs when producers alter the amount of a good or service they are willing to offer for sale at a given price. In this blog post, we will explore the concept of a change in quantity supplied, its causes, and its effects on the market.

What is a Change in Quantity Supplied?

A change in quantity supplied refers to a movement along the supply curve in response to a change in the price of a good or service. It is important to note that a change in quantity supplied is different from a change in supply, which refers to a shift in the entire supply curve caused by factors other than price. For example, changes in technology, input prices, and government policies can all cause a shift in the supply curve.

Causes of a Change in Quantity Supplied

The most common cause of a change in quantity supplied is a change in price. When the price of a good or service increases, producers are willing to supply more of it because they can earn a higher profit. Conversely, when the price of a good or service decreases, producers are less willing to supply it because their profit margins are reduced.

Another factor that can affect the quantity supplied is the cost of production. If the cost of producing a good or service increases, producers may supply less of it even if the price remains the same. This is because their profit margins have decreased and they cannot afford to produce as much as before. On the other hand, if the cost of production decreases, producers may be willing to supply more of a good or service even if the price remains the same.

Technology is also a factor that can affect the quantity supplied. Technological advancements can make it easier and cheaper for producers to produce a good or service, which may lead to an increase in the quantity supplied even if the price remains the same.

Finally, changes in the number of producers in a market can also affect the quantity supplied. If more producers enter a market, the quantity supplied will increase because there are more firms producing the good or service. Conversely, if firms exit a market, the quantity supplied will decrease.

Effects of a Change in Quantity Supplied

A change in quantity supplied can have significant effects on the market. When the quantity supplied increases, the supply curve shifts to the right, indicating that producers are willing to supply more of the good or service at each price. This can lead to a decrease in price as producers compete with each other to sell their goods. On the other hand, when the quantity supplied decreases, the supply curve shifts to the left, indicating that producers are willing to supply less of the good or service at each price. This can lead to an increase in price as demand exceeds supply.

One important concept to understand is the difference between a change in quantity supplied and a change in supply. A change in quantity supplied is a movement along the supply curve caused by a change in price, while a change in supply is a shift of the entire supply curve caused by factors other than price. A change in quantity supplied only affects the equilibrium price and quantity in the short run, while a change in supply affects the long-run equilibrium.

In addition, a change in quantity supplied can have ripple effects throughout the economy. For example, if the quantity supplied of a particular good or service increases, this may lead to an increase in the demand for complementary goods or services.

A change in quantity supplied is of two types

There is an increase in the quantity fried if the quantity supplied increases as a result of an increase in the price of the commodity. (b) Decrease in the quantity supplied: In this case, there is a decrease in the quantity supplied if the quantity of the commodity supplied decreases as a result of a decrease in price.

SHIFT OR CHANGE IN SUPPLY

A shift or change in supply in economics is quite different from a change in the quantity supplied as discussed in of this post.. read here There is a change in supply if the supply curve shifts to an entirely new position. In this case, there is completely new supply schedule and supply curve, showing that at the old price, more or less of the commodity would be supplied. A shift or change in supply is determined by the factors affecting supply except the price of the commodity.

A shift or change in supply is also grouped into two divisions:

Increase in supply: When there is an increase in supply, the supply curve will shift to the right, indicating that at the old price, more of the commodity will be supplied.
An increase in supply is brought about by a favourable change in the factors affecting supply other than the price of the commodity. For example, if there is improvement in the level of technology, more of the commodity is likely to be supplied at the old price.

(b) Decrease in supply: When there decrease in supply, the supply curve will the left, indicating that at the old price, less of the commodity is being supplied. -change in quantity supplied and change in supply-

A decrease supply is brought about by an unfavorable change in any of the factors affecting supply except the price of the commodity. Fore: if there is a change in taxation, e.g. increase in taxation against a commodity, the supply will fall, at the former price.

EXCEPTIONAL (ABNORMAL SUPPLY)

Exceptional or abnormal supplies are patterns which do not abide by the laws of supply and therefore give rise to the reverse the basic laws of supply ending with change in quantity supplied and change in supply

budgeting
factors affecting the expansion of industries
mineral resources and the mining industries

A normal supply slopes upwards from right to left, showing at a higher price, more of a commodity will be supplied. But an abnormal supply curve does not follow this rule.

An abnormal supply also called a regressive or backward sloping supply curve, does not slope upwards continuously from right to left thus showing that at a higher prices, less quantities will be supplied. That is a negative situation in which a fall in the price of the commodity leads to an higher expansion of its supply.

Causes of abnormal supply

Existence of some fixed assets: Land is a fixed asset. With time the price of land increases without a corresponding increase in its size. This situation can lead to abnormal supply curve as seen here. this is an example of a fixed supply curve or zero elastic or perfectly inelastic supply curve.
Rising wages: As wage rate increases, labour would at first increase its effort and the length of time they are willing to work.
After a certain wage rate, labour is no longer willing to increase the number of hours worked. They decrease the number of hours they will work at a higher wage rate leading to a supply curve that has more than one slope. This type of curve is known as backward-sloping supply curve. change in quantity supplied and change in supply

Target income: This situation is more applicable to agricultural products. A farmer who aims at a particular income target may go on supplying the market even when prices fall. Also when prices rise so high that he can quickly attain his target income, he can cut back on supplies.
Monopolistic practices: A sole supplier or trader of a product to a market may hold back supplies even when prices are rising, to push prices still higher up.