1.

Write short note on supply function.

Answer»

Supply function:

  • The supply function specifies a functional (mathematical) relationship between supply of a good and its determinants i.e. factors affecting the supply.
  • The supply function represents that the supply of one good is determined by many factors.

Mathematical form of the supply function:
Sx = f(Px, T, Pf, P0, U)
where Sx = Supply of commodity X
f = Functional notation
Px = Price of commodity X
T = Level of technology
PF = Factor prices
Pe = Expectations regarding future prices
U = Other factors


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