If a good or a service is supplied to the market, it implies the following facts.
Institutes owns technology and other resources for production
Institute can earn profits when producing goods
There is a plan to produce and market the good.
Supply of a good to the market by one firm is said to be institutional supply and the total of all firms is market supply.
The following factors determine a firm’s supply
Price of goods concerned. (P)
Price of inputs (C)
Technology. (T)
Price of related goods (Pn)
Expectations of producers (En)
Government policies (G)
Other factors.(O)
Except these factors the number of producers in the market also affects supply.(N)
Supply function can be illustrated with all these factors as follows.
QS = f {P, C, T, Pn, Ex, N, G,O}
Qs is dependent factors and all other factors are independent factors
The relationship between all determinents and supply is explained as the theory of supply.
