Meaning: It is associated with production analysis. It explains the positive relationship between the price of a commodity and the supply of that commodity. For example, if the price of cloth increases, the supply of cloth will also increase.
Definition: "Other things remaining the same, if the price of a commodity increases its quantity supplied increases and if the price of a commodity decreases, quantity supplied also decreases".
Supply Function: The supply of a commodity depends on the factors such as price of commodity, price of labour, price of capital, the state of technology, number of firms, prices of related goods, and future price expectations and so on. Mathematically the supply function is
Q_s = f (P_x, P_r, P_f, T, O, E )
Where Q_s = Quantity supplied of x commodity
P_x = Price of x Commodity
P_r = Price of related goods
P_f = Price of factors of production
T = Technology
O = Objective of the producer
E = Expected Price of the commodity.
Assumptions:
(i) There is no change in the prices of factors of production.
(ii) There is no change in price of capital goods.
(iii) Natural resources and their availability remain the same.
(iv) Prices of substitutes are constant.
(v) There is no change in technology.
(vi) Climate remains unchanged.
(vii) Political situations remains unchanged.
(viii) There is no change in tax policy.
Explanation: Supply function is Q_s = f (P) or Q = 20P.
P is an independent variable. When its value changes, new values of Q_s can be calculated.
Supply Schedule: It shows the different quantities of supply at different prices. This information is given in the supply schedule given below.

Q_s = 20 P

Supply Curve: A supply curve represents the data given in the supply schedule. As the price of the commodity increases, the quantum supplied of the commodity also increases. Thus-the supply curve has a positive slope from left to right.
The quantum supplied of commodity x is represented on X axis. And the price of the commodity is represented on the Y axis. The points such as e, d, c, b and a on the supply' curve 55', represent various quantities at different prices.
Factors determining supply:
(a) Price of the commodity
(b) Price of other commodities
(c) Price of factors
(d) Price expectations
(e) Technology
(f) Natural factors
(g) Discovery of new raw-materials
(h) Taxes and subsidies
(i) Objective of the firm

The Iso-cost line: The iso-cost line is an important component in analysing producer's behaviour. The iso-cost line represents different combinations of inputs which shows the same amount of cost. The iso-cost line gives information on factor prices and financial resources of the firm. It is otherwise called as "lso-price line" or "iso-income line" or "iso-expenditure line" or "total outlay curve".
Suppose that a producer has a total budget of H₂O and for producing a certain level of output, he has to spend this amount on two factors Labour (L) and Capital (K). Prices of factors K is no and L is HO. Iso Cost Curve can be drawn by using the following hypothetical table.

As shown in Table, there are five combinations of capital and labour such as combination A represents 4 units of capital and zero units of labour and this combination costs Rs 120.
Similarly other combinations (B, C, D and E) cost same amount of rupees (Rs 120).

Symbolically,
4K + OL = Rs.120
3K + 3 = Rs.120
2K + 6L = Rs.120
lK + 9L = Rs.120, and
OK + 12L = Rs.120.
Thus, all the combinations A, B, C, D and E cost the same total expenditure.
From the figure it is shown that the costs to be incurred on capital and labour are represented by the triangle OAE. The line AE is called as Iso-cost line.

Law of Supply: Law of Supply describes a direct relation between price of a good and the supply of that good.
Definition: The Law of Supply can be stated as:
Other things remaining the same, if the price of a commodity increases its quantity supplied increases and if the price of a commodity decreases, quantity supplied also decreases".
Supply Function: Mathematically the supply function is,
Q_s = f (P_x' P_I' P_f, T, O, E)
P_x = Price of x Commodity
P_r = Price of related goods
P_f = Price of factors of production
T = Technology
O = Objective of the producer
E = Expected Price of the commodity.
Assumptions:
i. There is no change in the prices of factors of production
ii. There is no change in price of capital goods.
iii. Natural resources and their availability remain the same.
iv. Prices of substitutes are constant.
v. There is no change in technology.
vi. Climate remains unchanged.
vii. There is no change in tax policy.
Supply schedule: A supply schedule shows the different quantities of supply at different prices. This information is given in the supply schedule given below.

Q_s = 20P
Supply curve: Supply curve represents the data given in the supply schedule. As the price of the commodity increases, the quantum supplied of the The Iso-Cost commodity also increases. Thus the supply curve has a positive slope from left to right.

i) The Quantum supplied of commodity x is represented on X axis.
ii) The price of the commodity is represented on the y-axis.
iii) The points such as e, d, c, b and a on the supply curve "SS" represent various quantities at different prices.

1. Price of the commodity
Higher the price larger the supply Price IS the incentive for the producers and sellers to supply more.
2. Price of other commodities
The supply of a commodity depends not only upon its price but also price of other commodities For instance if the price of commercial crops like cotton rise, this may result in reduction in cultivation of food crops like paddy and so its supply.
3. Price of factors
When the input prices go up, this result in rise in cost and supply will be affected.
4. Price expectations
The expectation over future prices determines present supply. If a rise in price is anticipated in future sellers tend to retain their produce for future sale and so supply in present market is reduced.
5. Technology
With advancement in technology production level improves, average cost production level improves average cost declines and as a result supply level increases.
6. Natural factors
 In agriculture, natural factor like monsoon, climate etc. play a vital role in determining production level.
7. Discovery of new raw materials The discovery of new raw materials which are cheaper and of high quality tends to increase supply of the product.
8. Taxes and subsidies
Subsidies for inputs, credit, power etc. encourage the producers to produce more. Withdrawal of such incentives will hamper production. Taxes both dirt and indirect kill the ability and willingness to produce more.
9. Objective of the firm
When the goal of the firm is sales maximisation or improving market share, the supply of the product is likely to be higher.

There are five types of elasticity supply. There are,
(1) Relative Elastic Supply: (ES> 1)
(i) The co-efficient of elastic supply is greater than 1 (ES> 1)
(ii) A unit change in the price causes more than one percent change in quantity supply of the commodity.

(2) Unitary Elastic Supply: (ES = 1)
(i) The co-efficient of elastic supply is equal to one (ES = 1)
(ii) A unit change in the price causes an equal change in quantity supply is called elastic supply.

(3) Relatively Inelastic Supply: (ES < 1)
(i) The co-efficient of elasticity is less than one (ES < 1)
(ii) A unit change in the price causes and less than one percent change in the quantity supply.

(4) Perfectly Inelastic Supply: (ES = 0) .
(i) The co-efficient of elasticity is equal to zero (ES = 0)
(ii) A unit change in the price causes no change in the quantity supply.

(5) Perfectly elastic supply: (ES= =)
(i) The co-efficient of elasticity of supply is infinity (ES = DC)
(ii) A unit change in the price causes an infinite change in the quantity supply.