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Introduction to Supply
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0:00
What's up everyone, welcome back to the channel. Guys, today we are going to start another new chapter of our microeconomics,
0:09
which is called supply. Okay, I know that your cost is remaining in the middle, revenue is remaining. But let me get the supply and market first. They are small. After this, I will get you that cost revenue and in this month I will finish your entire micro. Okay, so let's start quickly and let's cover this wonderful chapter today. Let's begin.
0:43
Now kids, the name of the chapter is supply. Look, you also read demand. In demand, what did we talk about? We talked about the consumer. That a consumer wants to buy how much quantity of any commodity.
0:58
Now he has not bought it, but he wants to do it. He is going to the market. He is saying that I am able, I am willing. I also have money. I also want to buy this quantity of this commodity. So we used to call it demand. Right? In the same way, kids, we read supply from the point of view of the producer. The producer manufacturer who is making the goods. He says that I have this stuff. I am able, I am willing. And I want to offer this stuff in the market. I want to sell it. We call it supply.
1:33
Very simple. What is written? Look at the kids. First of all, supply refers to the quantity of a commodity. Which a firm, which a producer, which a manufacturer is willing and able to offer for sale. Offer for sale means that I want to sell. Offer for sale at a given price. At this price, during a given period of time. Okay? Now kids, supply can be of two types.
1:57
Like demand is not of two types. Similarly, supply is also of two types. Individual supply, market supply. Individual supply means that this is the supply of one supplier, one seller.
2:09
This is the supply of one firm. That is, the quantity supplied by an individual firm in the market is individual. If I count all the firms of that particular thing. Then it will become a market. Let's suppose I talk about this mic.
2:24
I am offering this mic as a producer in the market. So that became individual supply.
2:30
How many producers are offering this mic in the market? How many people are there who want to sell it? If I add everyone, it will become market supply. So see it refers to quantity of a commodity. It refers to quantity of a commodity. That an individual firm. We are talking about one firm. That all the firms. We are talking about all the firms. Everything else is the same. Willing and able to offer. Willing and able to offer. At a given price, during a given period of time.
2:55
At a given price, during a given period of time. So kids, basically. We are talking about one firm. Individual supply. We are talking about all the firms. Market supply. There is only this much difference between the two. Understood? So what is supply? Understood? How many ways are there? Two ways. Individual supply. Market supply. After this, kids, a concept comes. Supply and stock. I tell you. Supply. Stock. Sale. We listen to three concepts. Two are written in the books. I teach all three.
3:23
What is supply? What is stock? What is sale? Kids, the biggest concept is stock. The biggest concept is stock. Stock means how much quantity is available with me. Let's suppose I am a manufacturer. I make a mic. I have made 100 mics and kept them with me. That is my stock. I have 100 mics. That is my stock. Now what did I think? I said, I don't take all of them to sell now. I take 60 pieces out of this. I keep 40 now. Because it will take time to make the next one too.
3:52
So I keep a little stock with me. I will sell the rest. So see, I had a total stock of 100.
3:58
How much should I offer in the market out of 100? That is supply. Offer 60. That is supply, kids. Now 40 out of 60 were sold. That is sale. So the biggest concept is stock. Out of that, how much supply should I offer in the market? Out of that, how many were sold? That is sale. It is possible that as much as you supply, all were sold. It is possible, kids. Should we offer 60? 60 of 60 were sold. So it is not necessary that the sale will be less. It can also be equal to the supply.
4:23
So the biggest concept is stock. Smaller supply than that. And then sale. Okay. See what is written. What does stock mean? Total quantity of a commodity which is available with the firm at a particular point of time. It can never be less than supply. It can never be less than supply. Because I will supply from the stock only. So it will never be less than supply. Right. After that, an example is shown. Take this screenshot and read it. It is basic. Okay. Let's go, sir.
4:49
What is the difference between supply and stock?
4:52
Definition is done. You know the definition. Then supply is a flow concept, kids. Flow means that it runs in a period of time. It takes a time to supply. That from here to here we sold so much stuff. During a given period of time. Right. We want to sell so much stuff basically. Not sold. We want to sell. That is supply. But stock is how much today. It does not happen during a given period of time. It happens at a particular point of time.
5:20
So keep in mind that if any concept is at one point of time, then we call it stock. Over a period of time, we call it flow. Okay. So supply is a flow concept. Sir, give another example of stock flow. See. I never say how much profit I have made right now. What do we say? So much profit in the last year. The whole year has come. During a period of time, it became a flow concept. Understood. And the stock concept, the stock concept happens at one point of time. Right now. Right now.
5:52
Like I said, how much money is in my pocket right now. That will happen right now. It will happen at one point of time. Okay. So similarly, stock also happens at one point of time. So the stock is the stock concept. Okay. And the supply is the flow concept. Right. Supply is saying that it will always relate to the price. And the price of the stock has nothing to do with it. That is a fixed quantity. Okay sir. Perfect. After this, what are the determinants of supply? Come.
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Children also call it determinants. And we also call it factors affecting supply.
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Factors affecting supply. Or we also call it determinants.
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That is, what are the things due to which the supply will be plus or minus. Due to which the supply will be up or down. So keep in mind that there are three prices. Okay.
6:54
PPP.
6:57
Price. Price. Price. Okay. Come. First I will teach you this only. Price. Price. Price. Sir, what are the prices? Price of given commodity. Price of other goods. Price of factors of production. See children, whenever there will be a supplier. Whenever I talk about supplier, I talk about some supplier.
7:17
Whenever there will be a supplier. Whenever there will be a supplier.
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There will always be one thing in the mind of a supplier. Profit. There will always be one thing in the mind of a firm.
7:25
Profit. The firm wants profit. No firm can work without profit. It is a simple thing. Tomorrow you will do business. There will be only one thing in your mind that you have to earn money. You want profit. Otherwise, what is the purpose of business? Business is zero without profit. So you want profit. Isn't it? So see, tell me one thing. If the price of a particular thing is decreasing in the market. Then its profit will also decrease.
7:49
Brother, when it will be sold expensive, then only I will earn more money. If it will not be sold expensive, then I will not be able to earn more money.
7:55
So if the price of a particular thing is increasing in the market, increasing, increasing. So we say that the price is increasing here. So the profit margin is also more. So I will try to sell as much as possible. That is, the supply will be more. If the price is low there, then the profit margin is also low. If the profit margin is low, then I will also reduce the supply. This means that there is a direct relationship between price and supply.
8:23
If the price increases, then the supply will also increase. If the price decreases, then the supply will also decrease. See what is written. The most important factor determining the supply is its price. As a general rule, price and supply are directly related. As price increases, quantity supplied also rises. Is it clear kids?
8:45
What comes after this? After this comes the price of other goods. What does the price of other goods mean? The same goods that are similar to us. Let's suppose I am a farmer. And I grow wheat. Suppose I grow wheat.
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Now the price of wheat is decreasing in the market. And the price of organic vegetables is increasing. That people have started eating a lot of organic vegetables.
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So the price of wheat is decreasing. The price of organic vegetables is increasing similarly. So I will do one thing. I will see that there is a profit in organic. So leave wheat, this time plant organic vegetables. So I will shift my production from wheat to organic vegetables.
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Why? Because there is a lot of profit in it. So see when the price of my other goods increased. When the price of my other goods increased. That is, the price of vegetables increased. Then I will reduce the supply of my own product.
9:45
Why? Because I will go to make that other good myself. That there is more profit in it, let's grow it. So if the price of other goods increases. Then the profit margin increases in it. Then we will reduce our supply. We will try to increase its supply.
10:00
At the same time, if the price of other goods keeps on decreasing. If the price of related goods keeps on decreasing. Then those producers will also try to come here. Then the supply will increase here. Got it? See what is written. As resources have alternative uses, Quantity supplied of a commodity depends not only on its price. He is saying that it does not only depend on its price. It also depends on the price of other commodities.
10:23
Increase in the price of other goods. If the price of other goods increases. Like in our case, our good is wheat. If the price of vegetables increases. Or if the price of any fruit increases. They make them more profitable. So more profit is seen in it. So what does the firm do? Shifts its resources.
10:38
From production of given commodity to other good. Got it? Next is the price of factors of production. What does the price of factors of production mean? Children see a lot of factors of production. Are involved in the production of anything. Like if I have to teach this. I have to teach you. I am doing the production of services. So a lot of factors of production are involved in producing it. Like electricity is involved. I needed this camera. I needed this mic. My own availability is important.
11:08
I needed this board. I needed this labor to make PPT. So in every way, children. I need humans. I need land. I have to stand here and teach. I need labor. That is, I need a lot of people to help me in these things. Along with that, I need capital. I need money to buy all the things. I need all this material. After that, my own availability is important. So somewhere, children. There are a lot of factors of production. Which are needed whenever you have to make a commodity.
11:38
Now if the price of these factors of production increases. If all this becomes expensive. Then my margin will start decreasing. I will not be able to earn anything. Then I will reduce the supply. I will say that I will do something else. And if the factors of production become cheap. If all these things start becoming cheap. Then I will say that there is a lot of margin in this. I will do this work better.
12:00
So what is said in the price of factors of production? When did this happen? I did not know. What is said in the price of factors of production? That when inputs like labor, capital, raw material. All this is the cost of production. If their price increases. Then the cost increases. What happens when the cost increases? Profit decreases. So the seller reduces the supply. After this comes the state of technology. State of technology. Government policy. And goals of the firm. Should I write?
12:33
State of technology.
12:37
State of technology. Government policy.
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And goals of the firm. Goals of the firm. Price of given good.
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Prize of other good.
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Prize of factors of production.
13:01
What happens in prize of given good? If the price is increasing. Then we will also increase the supply. What happens in the prize of other good? The price of other goods is increasing. So my supply will be reduced. We will go to the other good.
13:14
Prize of factors of production if growing. Then the cost increases. We will reduce the supply. Now what is there in technology, children, it is very easy. If the technology keeps getting better, it will keep getting better, it will keep getting good, then the cost of production will be reduced. The better the technology, the less the cost of production. So the better the technology, the less the expense, the more the profit, the more the supply.
13:38
So if the technology is updated, if the technology is updated, now what happens by being updated, the cost of production reduces, due to which the profit increases and we also increase the supply.
13:58
And if the technology is outdated, outdated means children it is old, it is old technology, what will happen with this, the cost of production will increase because there will be a lot of wastage, the profit will be less, so the supply will also be reduced, simple. In government policy, children, we talk about taxes of the government and talk about subsidies of the government. See what the government does, it is in the hands of the government to impose taxes or give benefits.
14:28
So if the government has given us a subsidy, subsidy means the government gives benefits. Like the government said that you people teach, all the people who are going to teach, there are people with education, we will charge them 50% electricity bill, 50% electricity bill will come. So now the government has given a subsidy to promote education, gave benefits, so a lot of people will come to education, a lot of people will start teaching in education that the cost is less here.
14:54
Similarly, if the government imposes tax that the people who are going to teach double tax on them, so a lot of people will leave and go, they will say double tax, we will not do this work. So if the government increases taxes, then the supply becomes less.
15:11
And if the government gives subsidy, benefits, then the supply also increases, because more and more people come to work.
15:19
The third thing is easy, what is written in this that how much supply you will do, how much you will not do, it depends on your goals.
15:27
Now there are some firms whose goal is to capture the market, like Jio did. What was Jio's goal? When Jio came new, its goal was to reach every house in the market. So what did they do? Free Jio, very cheap internet, everything is free. What did they do in that scenario? Supplied more in less price also. So their goal was that. Today their goal is not that, so today they are charging, now the prices of everything have also increased, today they do not give so cheap.
15:54
So how much supply will be in the market, how much will not be, it also depends on the seller's goal, it also depends on the seller's aim.
16:02
So these are 6 factors which directly or indirectly impact the supply.
16:11
I have told you everything about technology, advance and improve technology reduces the cost, which increases the profit margin, so supply will also increase. In government policy, increase in taxes increases the cost of production, supply will decrease. What is written in the goals is that supply usually depends on prices, but somewhere now it is not necessary that it will be done on price, every firm can have different goals.
16:40
Change in quantity supplied vs change in supply is the same concept, like change in quantity demanded vs change in demand, if supply is changing due to price, due to the first factor, due to price of the given commodity, then we do not say change in supply there, we say change in quantity supplied only. And if supply is changing due to other factors like price of other good, price of factors of production, due to technology, due to government policy, due to
17:07
goals, then in that scenario we say change in supply.
17:11
Whenever supply for a given commodity changes due to change in its price, then we call it change in quantity supplied. And if it happened due to other factor, then it is called change in supply.
17:23
Now coming are the determinants of market supply, so keep in mind, it is the same, all work in market supply, previous ones also work, these will also work. So you will write only that in individual, if there is individual supply, even if there is market supply, those will also work. There are some additional, I will also teach you that. Like number of firms in the market, if number of firms in the market keeps increasing, then supply also increases, increases, increases.
17:50
Like when I started teaching on YouTube in 2017, you will go and see my first video is in 2017. So at that time there were not so many teachers, so many people did not believe, people did not know that YouTube is also a platform on which you can do a lot. Very limited people used to be in commerce, 1-2 more people used to be in commerce, that's it, there was no one else at that time, in 2017. Today you see 2024 is going to end, after 7-8 years, how many people have come today?
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How many people understood the power of technology? How many people understood the power of knowledge? How many people understood the power of internet? You have got a platform where you can tell, you can present yourself, you can keep your skill in front of people.
18:33
So whenever the number of firms increases, the number of producers increases, then of course supply increases, and how good it is for children. How beautiful it is for all the kids that there are so many teachers, how good it is, there can be no better blessing than this. Sometimes I think that when we were in our schools, then why did we not have these things, that how many teachers are available, and you click on your phone, read from anyone, what fun it is.
18:59
Many times people ask me that sir, do you feel that so many people have come, you have become a competition, I say that it is fun, more people should come, because ultimately the purpose is that the children should be good. It should be good for the children, the more people come, the better it is. I have so many students who are teaching on YouTube today, I help them a lot to grow their channel, to move them forward, because ultimately more good teachers
19:26
will come in the society, children will get more good things, how much fun it is. So whenever the number of firms increases, the number of producers increases, then the supply also increases, it is a simple thing. Next is Future Expectations Regarding Price. Look, if the seller feels that in the future, it is an expectation, the price of commodity is going to increase in the future.
19:49
So if the seller feels that the price of commodity will increase in the future, then he will reduce the supply now. Why? Because he will say that I will sell in the future, there will be good earnings. The price will increase in the future, then I will sell in the future, not now. So if seller has this expectation that price will increase in future, then he will sell it in future. Today he will not sell. And if seller has this expectation that things are not going to increase in
20:14
future, today price is high, in future it might decrease, then he will try to sell more today itself, so supply will be there today only. So keep in mind, price is going to increase in future, today supply will be less. In future price will be less, today supply will be more. Next is means of transportation and communication, this is simple. If transportation is good then you can maintain more supply, you can supply goods to the whole country.
20:39
If transportation and communication is good then supply is more, if transportation and communication is not good then supply is less. Very simple.
20:47
After this comes supply function, I have told you earlier also. Wherever you read the word function, to understand from function, function means relationship. So what is the relationship of supply with other factors? Like supply is changing due to price, due to price of other goods, due to price of factors of production, ETC, ETC, ETC, there are many factors. So what change came in supply? Due to which factor is it called supply function?
21:11
It shows the relationship between quantity supplied for a commodity and the factors influencing it. How do kids write this? They write it like this that supply of X's functional relationship with all factors. Price of X, price of other goods, price of factors of production, state of technology, they write like this. You just need to know this. After this kids, we will get individual supply function in which we will talk about individual supply factors.
21:36
Then we will get market supply function in which we will add all those factors, last 3 also. All come in the market. Add everything. Perfect sir.
21:48
After this kids, we will study supply schedule from here in the next class. And we will finish the chapter. Just supply schedule, supply curve, law of supply, its exceptions and one difference in the last. Change in quantity supplied and change in supply. Your chapter will end. So I will put one more class kids. Tomorrow's class most probably. We will finish it tomorrow or tomorrow I will do depreciation. Depreciation is your hurdle. You have to do things ahead in depreciation.
22:14
I will do that tomorrow. And in the same way, we will move things forward in a very magnificent way.
22:18
Alright. Thank you so much guys for joining in. I am gonna see you all super soon. Till then see ya. Take care. Bye bye. Like the video. Keep growing, keep glowing and keep smiling.
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