Supply Function

The main determinants of supply of a commodity are:

• The price of the product;
• The price of inputs;
• The state of technology;
• Natural factors.
  

These factors can be summarized in the supply function

Q^s_x = f (P_x , P_L , P_K, T)

Where Q^s_x is the quantity supplied of a commodity X, Px is the price of X, P_L and P_K are the prices of labour and capital respectively which represent input prices and T is the state of technology. The function f shows the quantitative relationship between variables on the left hand and right hand side.