Supply

Now look at the mango story from the seller's side. Supply (poorti) is the quantity of a product that sellers are willing and able to offer at a particular price.

The Law of Supply: when the price rises, the quantity supplied rises; when the price falls, the quantity supplied falls. Price and quantity supplied move in the same direction: a direct relationship.

"Why would sellers offer more when the price is higher?" Because a higher price means more profit. Producers are encouraged to make more, and new firms are attracted into the market.

Seller A offers 1 kg at ₹50, 2 kg at ₹100 and 3 kg at ₹150. Join the points and you get an upward-sloping supply curve (Fig. 9.4). Compare: the demand curve slopes down, the supply curve slopes up.

Back to the mango season: at the start, supply is low, so mangoes are costly. By mid-season, supply grows and prices fall. In short: when supply is less than demand, prices rise; when supply is more than demand, prices fall.

Market supply is all sellers' supply added together (Table 9.2):

"Why would seller B offer 3 kg at ₹50 when A offers only 1 kg?" Sellers are different. One may have paid more for his stock and not want to sell cheap; another may have ripe mangoes that will spoil by tomorrow, so he is happy to sell more now.

Other things also shift supply, even at the same price:

1. Prices of related goods. A farmer sees wheat prices low and chickpea prices high. Next season he plants more chickpeas (Fig. 9.6). Supply of one crop depends on how profitable the alternatives are.

2. Number of sellers. More sellers: more supply, prices fall. Fewer sellers: less supply, prices rise.

3. Technology. Better technology lowers the cost of production, so producers can supply more. Drip irrigation and weather sensors raise crop output; cold storage lets mangoes travel to distant markets, so more reach buyers.

4. Future expectations. If producers expect demand to boom, they produce more. If potato wholesalers expect prices to rise in the peak season, they may hold stock back now, to sell later at higher prices.

5. Other factors the book asks you to think about: the cost of inputs (raw materials, wages), the discovery of a new input, resources running out, a change in weather, or a disaster. A flood that ruins a crop cuts supply; a cheaper fertiliser raises it.