Question

With the help of diagrams, explain the relationship between time period and supply.

Explain the relationship between time period and supply.

Answer 1

The supply is fixed for a very brief amount of time during the market period. The stock of the already-produced commodity is the maximum supply during the market time. The supply of perishable foods is one example of this. For example, no matter the price, the supply of vegetables cannot be altered once they have been harvested and delivered to the vegetable market. As a result, businesses are unable to adapt their output to price changes within the market time. Consequently, a company's or industry's supply curve is vertical, as shown by s₁s₁ in Fig.

1. Short run: The short run is the time period within which supply can be somewhat modified. By operating the current plant for extended hours, such as two shifts rather than one, producers can boost output. There is not enough time in the short term for the companies to install new machinery or factories. It is possible to raise the short-term supply to a certain degree. As a result, the short-term supply curve slopes higher, much like S₂S₂.
2. Long run: The long run is the time period in which businesses can construct new facilities or shut down existing ones. Additionally, new businesses can enter the market by establishing new facilities. As a result, a significant shift in the amount delivered over time is feasible. A flatter supply curve S₃S₃ in Fig. 4 serves as an example of this.