(a) What is competitive supply?
(b) With the aid of illustrations, differentiate between a supply schedule and a supply curve.
(c) Explain how the supply of a commodity is affected by the following:
(i) an improvement in technology;
(ii) a rise in input prices;
(iii) a rise in the prices of other commodities;
(iv) an increase in government subsidies on production.
Explanation
(a) Competitive supply is when two or more products are produced using the same resources such that an increase in the production of one leads to a reduction in the supply of the other.
(b) A supply schedule is a table showing the various prices and quantities of a commodity which sellers are willing to offer for sale at a given period.
| Price ($) | Quantity supplied (tones) |
| 10 | 100 |
| 9 | 80 |
| 8 | 50 |
While a supply curve is a graphical representation of various quantities of a commodity which sellers are willing to offer for sale at various prices.
Price.
(c)(i) An improvement in technology would raise the productivity of inputs and increase production, all things being equal. As production increases, supply would increase. (ii)A rise in input prices would increase the cost of production. All things being equal, production would decrease and supply would decrease.
(iii) A rise in the prices of other commodities would make their production more profitable, all things being equal. As a result, resources would shift into the production of these commodities and decrease the production and supply of the other commodity.
(iv) An increase in government subsidies on production will reduce the cost of production which will lead to an increase in the production and supply of product.