Question

Why can supply be more than production but not more than the stock?

Answer 1

Answer:

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Explanation:

Three little words. Often that is all it takes to make one’s heart beat faster. “Liberty, equality, fraternity” captured the French Revolution. “I love you” underpins many a successful relationship. “Life, liberty, happiness” are at the heart of the U.S. Declaration of Independence. For many economists, those three magic words are “supply, demand, price.”

In any market transaction between a seller and a buyer, the price of the good or service is determined by supply and demand in a market. Supply and demand are in turn determined by technology and the conditions under which people operate. At one extreme, the market could be populated by a large number of virtually identical sellers and buyers (for example, the market for ballpoint pens). At the other extreme, there might be only one seller and one buyer (as would be the case if I want to barter my table for your quilt).

Answer 2

Answer:

• Production is the amount of goods created by the available factors of production during a fixed time period.
• Stock is the total available amount of goods with a producer, which can be offered for sale in market as per his/her willingness & ability.
• Supply is the amount of goods a seller is willing & able to sell at a given price & a particular point of time.

FOR EXAMPLE:

Daily Production of a company is 1000 units, at the same time Supply is 200 units. Therefore, the rest of 800 units becomes Stock.

Thus, everyday the units which are left after daily supply increase the stock. As a result, Stock increases day by day.

It so happens once that Stock is 10000 units, and as price of that good rises, the producer increases the supply, n Supply is 1500 units, per day.

Thus, Supply becomes more than Production, but Stock is always the greatest ( because it is the units of goods remained after supply, and it keeps on piling/increasing)