Agenda

• Rationalizing supply as a producer / supplier
• What constitutes supply
• Definition of supply
• Law of supply
• Difference between quantity supplied and overall supply
• Factor / variables of supply

Total Revenue = Profit x Output

Total cost = Explicit cost + Implicit cost

Explicit costs are out-of-pocket costs for a firm—for example, payments for wages and salaries, rent, or materials. Implicit costs are the opportunity cost of resources already owned by the firm and used in business—for example, expanding a factory onto land already owned.

Cost of Inputs

• Inputs = Raw materials OR Combination of the resources used to prepare a good or a service
• Lesser the cost of goods the more the production
• If the cost of inputs is on the lower side then the production should be on the higher side

Supply

• Supply could be goods or services be available for the buyers.

• The desire backed by the willingness and ability of the producer / supplier to make the goods / services available at variable prices to the buyers

  Pizza is a good and pizza delivery is a service

Law of supply

• Greater the price, greater the quantity supplied (keeping other variables of supply constant)
• $p \alpha Q$

Change in Supply

• Price remains constant