Explaining The Supply Function With Formula

Supply function explains the relationship between two variables namely supply and the factors that determine the supply. It states the arithmetical relationship between the supply of a commodity and the various factors determining supply. Supply Function With Formula Supply function is explained with the help of the following formula: Sa= F (Pa, Px, Py, Pz, Pf) Where Sa denotes the supply of commodity ‘a’ Pa denotes the prices of commodity ‘a’. Px, Py and Pz denote the prices of the factors of production. Pf stands for the state of Technology. …

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12 Factors Determining The Supply Of A Commodity

The term supply denotes the quantity  of a commodity offered for sale at different prices by the producers. “Extension” and “contraction” are two terms used for denoting the changes in supply. When the quantity offered for sale raises due to an increase in price, it is known as extension of supply. Extension and contraction of supply are shown along the same supply curve. Extension and contraction of supply is called movement along the supply curve. Supply of a commodity extends or contracts due to the influence of the law of …

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Elasticity of Supply: Formula, Importance And Factors

The law of supply does not explain the exact changes in the quantity supplied of a commodity due to a chance in price. Change in supply is not same in the case of all commodities. It may be less in the case of some commodities and more in the case of other commodities. In this connection, the concept of elasticity of supply is useful for estimating the exact proportionate change in the quantity supplied due to a proportionate change in the price of a commodity. Elasticity of supply Formula: This …

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Law of Supply: Determinants, Assumptions, Exceptions and Limitations

Supply is an important factor which determines the price of a commodity. It implies the quantity of a commodity or service offered for a sale at a particular price in a given market and a given time. While perishable goods like flowers, vegetables, milk etc have inelastic supply, durable goods like benches have elastic supply. Determinants of Supply : The supply of a good is determined by the following factors. 1) It depends on the price of the commodity. 2) It depends on the prices of its substitutes and complementary …

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Characteristics Of Perfect And Imperfect Markets

Market is a place where the buyers and sellers make transactions regarding goods and services. Depending on time, competition and extent of area, markets are classified into several types. On the basis of competition markets are classified into perfect markets and imperfect markets. Perfectly competitive Markets: Perfectly competitive market is one which consists of large number of buyers and sellers, uniform price and homogeneous commodities. No single buyer or seller is able to exercise control over the price of a commodity. The price of a commodity is same throughout the …

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Factors Affecting The Size Of A Market

The extension or size of a market is determined by several factors. More of the factors are related to the internal infrastructural matters of a country. They are having mixed characteristics of micro and macro economics. These factors are explained below : Factors Affecting The Size Of A Market: The extension or size of a market is determined by the following factors: 1. Transport facilities : The size of market depends on the nature of transport facilities existing in a country. If a country has all wealthier roads, it will …

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Meaning Characteristics And Classification Of Market in Economics

Meaning of Market: In ordinary language the term Markets means a place or locality where commodities are bought and sold. But in Economics this term has a special meaning. Before discussing the classification of market, we should know what the market is. In Economics it refers to a commodity which is being bought and sold. In Economics place has no significance. The buyers and sellers may not reside at a particular place. Telephone, Telegrams, Stock exchanges, Merchant guilds etc., are the means which bring co-ordination between buyers and sellers. Hence …

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Marginal Rate Of Technical Substitution And Isoquant Curve

marginal rate of technical substitution, elasticity of substitution

Marginal Rate Of Technical Substitution It is possible to substitute one factor for the other in production process. For example, we can substitute labor for machinery or machinery for labour. Especially this is possible in a firm like cigarette packing. Cigarettes can be packed either with the help of labourers or machinery. Factor elasticity of substitution measures the rate of substitution on between two factors of production. Factor elasticity of substitution will be infinite if we completely substitute Factor ‘A’ in place of factor ‘B’. It will be zero, if …

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Cobb Douglas Production Function : Formula Importance Limitations

cobb douglas production function formula

Cobb Douglas production function is an important function in managerial economics. It was explained by Prof. Cobb and Prof. Douglas. These two economists have studied the production patterns of American manufacturing industry. The production function explained by them is known as Cobb-Douglas production function, in their names. Equation of Cobb Douglas Production Function: Their production function is mentioned as follows: P=K L a C I -a In the above equation ‘P’ denotes the output, ‘L’ stands for the amount of labor employed, C represents the amount of capital. K and a …

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Production Function : Meaning, Characteristics And Formula

production function formula

Production is a process involving the use of different physical inputs. In fact it is the result of the inputs. Factors of production are also called ‘inputs’. The product obtained from the inputs is known as ‘output’. Production function explains the functional relationship between physical inputs and physical output. Production function shows how maximum output is secured with the combination of different inputs in a given time and with a given technology, managerial ability etc. Definition of Production Function: Professor Stigler defined the function as “the name given to the …

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