What is Supply function? |
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| Ans : Supply function is defined as the functional relationship between supply for a commodity and its determinants. It can express as:
Sₓ= F (Pₓ,Pₒ,Pf,T,Gp,N,E,I,G)
Where,
Sₓ= Supply of commodity x
F= Function
Pₓ= Price of commodity x
Pₒ= Price of other goods
Pf= Price of factors of production
T= Improvement in technology
Gp= Government policy
N= Number of firm
E= Expectation of firm
I= Infrastructure development
G= Goal of firms
Above given supply function is multi variable supply function. If we assume that there is only change in price other things remaining constant, we get single variable supply function which is given below:
Sₓ = F (Pₓ)
Where,
Sₓ = Supply for commodity x
F = Function
Pₓ = Price of commodity x
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