What is the relationship between the price of a product and the quantity supplied brainly

efficiency: when the optimal amount of goods are produced and consumed, minimizing wasteequilibrium: price and quantity combination where supply equals demandequilibrium price: the (only) price where the quantity supplied in a market equals the quantity demandedequilibrium quantity: the quantity both supplied and demanded at the equilibrium priceshortage (or excess demand): situation where the quantity demanded in a market is greater than the quantity supplied; occurs at prices below the equilibriumsurplus (or excess supply): situation where the quantity demanded in a market is less than the quantity supplied; occurs at prices above the equilibrium

Research can help you find the optimum price for your products. Generally, the optimum price is one that your customers are willing to pay, without it affecting your profits. This isn't a one-off activity, you must monitor your key pricing influences regularly as part of your overall market research to ensure your prices stay competitive and you still meet your customers' expectations.

Market testing

To help you determine how much your customers are willing to pay for your product or service you should perform some form of market testing. As a start, research your customer's purchasing behaviour such as:

• their current and anticipated demand for this type of product or service
• what they pay for similar products or services
• the quantity likely to be purchased
• additional features they value.

With this customer information in mind, you can then develop a price comparison offering a number of different product or service options for testing to help you determine a price range that is acceptable.

Competitors

You should have already determined who your direct competitors are and how your business compares to them when you developed your marketing plan. This information can be useful to help you determine your price point.

If you decide to use your competitors' prices as a guide, be careful that it doesn't dictate your prices too much, as it can seriously undervalue your product or service and drive down your profits.

When you compare your business to competitors, it's also important to ensure you look at the business as a whole and compare on other value-based traits (such as special features, quality and customer service) as well as price.

Influences

Pricing influences are external factors that can impact the price of products. Four influences that you may encounter include:

• price sensitivity
• level of demand
• level of competition
• government regulation.

Price sensitivity

Price sensitivity refers to price fluctuations as customer demand increases and decreases. For example, commodity goods such as petrol have high price sensitivity. The difference of a few cents in price can impact a customer’s behaviour.

Some markets are more sensitive to price increases than others. Price sensitivity can change over time based on a number of factors including changes in the economic environment, competition or demand. Factors other than price, such as quality, service, and uniqueness, can also influence price sensitivity.

Level of demand

Product and service demand can influence your prices. If there is high demand, it is likely you can increase your price. Price can also influence demand. For example, if the price lowers, then demand can temporarily increase.

Level of competition

Competition can also influence your product’s or service’s price. In general, the less competition you have, the more demand there is for your product. If a new competitor enters the market, the competitor can affect your price.

Government regulations

Government regulation can influence your pricing decision, as additional fees or levies may increase the sale price of your product or service.

The seller of the product represents the supply side of the commodity. This may include firms, governments, or even individual producers.

The terms ‘supply’ and ‘quantity supplied’ are interrelated concepts in economics.

This content attempts to explain the difference between supply and quantity supplied.

Contents: Supply Vs Quantity Supplied

Comparison Chart

Basis for ComparisonSupplyQuantity SuppliedMeaningSupply implies the overall relationship amidst different prices and quantity supplied at each price.Quantity supplied is the amount of product offered for sale in a given period at a particular price.RepresentsHow much the market can offer.Amount of good made available by the producers when receiving a certain price.Reflected bySupply schedule or supply curvePoint given on supply curveChange is a result ofChange in non-price determinantsChange in priceChange is indicated byShift of entire supply curveMovement along the supply curve

Definition of Supply

Supply refers to the whole schedule of quantities of the commodity which seller offers for sale, at all possible prices.

These prices are already given for the day, week or month while other factors remain constant.

• It is a combination of both willingness and ability of the producer to supply.
• It is a flow concept.

Noting that the actual sale of that commodity is not the same as its supply.
For example, A farmer who is a producer of potatoes is ready to sell kgs of potato at a price of 20 Rs. per kg, but he is able to sell only 60 kgs of potato. So, here 100 kgs represent supply, while 60 kgs represent sale.

It includes:

• Quantity of the good which the seller is willing to supply.
• Price at which the seller is ready to supply the quantity of that good.
• The period during which the seller is willing to supply that quantity.

What are the three ways to express supply?

The three ways to express the supply of commodity by the firm or market are:

Supply function:
It is an algebraic expression that states the individual supplier’s behaviour. This reflects what the supplier firm offers in the market at the given price.

Supply schedule:
It is a tabular presentation of different quantities which the firm offers for sale. The firm offers these quantities at different prices at a given period of time. It explains how the quantity supplied of a good is related to its prices. Noting that there is no change in its non-price determinants.

Supply curve:
It is the graphical representation of the information presented in the supply schedule.

Also Read: Difference Between Demand and Quantity Demanded

Definition of Quantity Supplied

Quantity Supplied refers to the total quantity of a good which the supplier decides to produce and sell in the given circumstances.

• It indicates the quantity of the product, which the seller is able and willing to sell at a definite price.
• It represents a point on the supply curve which we are referring to.

In general, the supply of a commodity varies directly in relation to its price. This means that at higher prices the firm supplies more quantity of a commodity and vice versa.

Example

With the help of this supply schedule, we will plot the supply curve

A functional relationship exists between the quantity supplied and the price of a commodity. Plus, it displays:

• The maximum possible quantity which the supplier willingly supplies at each price.
• The minimum price encourages suppliers to offer different quantities for sale.

Also Read: Difference Between Movement and Shift in Demand Curve

Key Differences Between Supply and Quantity Supplied

Below we will discuss the differences between supply and quantity supplied:

1. Supply is the basic concept in economics. It implies the different quantities that the producer is willing to sell at various possible prices. But, quantity supplied is the total amount of commodity which suppliers will offer, at a particular market price.
2. Supply represents how much the market can offer at different prices. In contrast, quantity supplied represents what amount of commodity producers will supply at a specific price.
3. The supply schedule or supply curve indicates the supply of the commodity. Whereas the quantity supplied is reflected by the point given on the supply curve.
4. The supply curve tends to shift when it encounters a change in non-price determinants. This influences the supplier’s willingness to sell the product. Non-price determinants may include:
   • Cost and technology
   • Price of related goods
   • Future expectations about prices
   • Size of the industry
   • Number of sellers
   • Weather conditions, etc.
     On the contrary, a change in the quantity supplied is a result of the change in the price of the product.
5. A shift in the entire supply curve indicates a change in supply. Whereas the change in quantity supplied results in a movement along the supply curve.

Law of Supply

It states that the producer will produce and offer more quantity of a commodity as the price of that product or service increases. However, other determinants are constant. Consequently, the change in the price of the commodity is the cause. And its effect can be seen in the change in the supply of that commodity.

Also, high prices encourage a firm to produce or sell more.

• The relationship between quantity supplied and the price is direct and positive.
• Supply curve slopes in the upward direction towards the right. This is because of the positive relationship between quantity supplied and price.
• We can also say that supply of a commodity is directly related to its price.

Change in Supply and Change in Quantity Supplied

Non-price factors determine the supply curve’s location. This location refers to the distance from the point of origin. However, price of the commodity determines the slope of the curve. Hence, supply changes in two circumstances:

Movement along the supply curve

When there is an increase in the supply of the commodity due to the increase in its price. This concludes that there is an increase in the quantity supplied. So it leads to the movement towards the upward direction on the supply curve and in the right.

When there is a rise in the market price this results in an expansion of supply. But when there is a fall in the market price of the commodity, this results in contraction of supply. This discourages the producers to offer products for sale in the market.

Movement from one supply curve to another

Also known as a shift in the position of the entire supply curve. When there is a change in the supply of the commodity but there is no change in its price. This depicts that the supplier shift from one supply curve to another.

Such a movement is the increase in supply. In this, the producer moves towards the right in the outer supply curve.

In contrast, when the movement is towards the left in the inner supply curve, it portrays the ‘reduction’ in supply.

An increase in supply depicts the bodily shift of the supply curve towards the right. This takes place due to the change in non-price determinants. In this situation, producers offer more quantity of the product at the same price.

A decrease in supply portrays the bodily shift in the curve towards the left. This happens because of the change in non-price factors. And in this situation, less quantity of the commodity is offered for sale, at the given price.

Also Read: Difference Between Demand and Supply

Determinants of Supply

The determinants of supply are discussed as under:

• Price of the Product: When the price of the good offered for sale is high, the supplier will supply more quantity. This happens because firms produce goods and services with an aim of earning profits. It encourages the suppliers to produce more goods to earn maximum profits.
• Prices of Other Goods: The hike in the prices of other goods encourages the firm to produce and sell them. The producers will use more of their resources to produce and sell more profitable goods.
• Price of input: Input implies factors of production labour, land, capital, and so forth. When there is a hike in the price of the input, it results in a decrease in supply. When the cost of input is low, often makes the production more profitable. It motivates the existing suppliers to raise production levels. Also, new firms may join the race.
• Technology: State of technology also determines the supply of products. Suppose the firm starts using better technology in the production of goods. This leads to an increase in production, with the same amount of resources utilized.
• Government Policy: Government imposes different rules and regulations. These rules govern what the firms can sell and also how much they can sell. Further, the government levies taxes at different stages of production and sale. This increases the overall production cost. So, there will be an increase in the quantity supplied when the price rises.
• Industry Size: Industry size and the number of competitors influence the quantity supplied. This implies, in a competitive industry, the supply of the product is generally more. Whereas with a monopolistic industry, the supply is comparatively less.
• Future Expectations: The firm decides when the product would be sold in the market, i.e. at present or in the future. This depends on the forecast for future prices. Expectation about the increase in future price will decrease the current supply and vice versa.

Conclusion

The supply of a commodity depends on other factors also. These factors are natural factors, man-made factors, infrastructural facilities and firm goals.

What is the relationship between the price of a product and the quantity supplied?

What is the relationship between the price of a product in the quantity supplied brainly?

Which of the following shows a direct relationship between price and quantity?

Which of the following illustrates the inverse relationship between price and quantity demanded of a particular good?