Meaning of Supply and Supply vs. Stock

Having studied how a buyer's demand behaves, the Maharashtra HSC (MSBSHSE) Std XII Economics syllabus turns next to how a seller's or producer's supply behaves — supply is the other blade of Alfred Marshall's famous 'scissors' that together determine market price.

In economics, supply means the quantity of a commodity that a producer or seller is willing and able to offer for sale in the market at a given price, during a given period of time. Two conditions must both hold: the seller must be willing to sell, and must actually have the commodity available to sell, at that specific price and time. Just as demand is always stated at a price and over a period, supply too has no meaning unless both are specified — 'supply of wheat' is incomplete without stating at what price and over what period (a week, a month, a season).

Supply is not the same as stock. Stock (or 'total stock') is the ENTIRE quantity of a commodity physically available with a producer or trader at a given point in time — it includes everything currently on the shelf, held in a warehouse, or otherwise ready to hand, whether or not the seller has chosen to sell any of it. Supply, by contrast, is only that PART of the stock which the seller actually decides to bring to the market and offer for sale at the ruling price. Stock is thus the outer limit, or potential supply; actual supply can be smaller than the stock (a trader may hold back part of it, expecting a better price later) but can never exceed it. A shopkeeper's stock of rice might be 500 quintals, but if only 300 quintals are being offered for sale this month at the current price, the supply is 300 quintals, not 500.

Like demand, supply can also be studied at two levels: individual supply (the quantity ONE seller/firm is willing to offer) and market supply (the sum of the individual supplies of ALL sellers of that commodity in the market at each price).