What Is Supply?
In economics, we have two forces: the producer, who makes things, and the consumer, who buys them. Supply is the producer's willingness and ability to supply a given good at various price points, holding all else constant. An increase in price will increase producers' revenues, so they'll be willing to supply more; a decrease in price will reduce revenues, and so producers will supply less.
Supply's counterpart is demand; it measures how many consumers will want to buy a product at various price points. The direct relationship between price and quantity supplied of a good is known as the Law of Supply and is typically represented by an upward sloping line known as the supply curve.
Supply
Supply, on the other hand, is the quantity of a commodity that is in the market and available for purchase at particular price. In other words, supply is the amount of goods and services available for sale at given prices in a given period of time and place. Supply implies the ability and willingness of seller to sell.
Factors affecting supply
Innumerable factors and circumstances could affect a seller's willingness or ability to produce and sell a good. Some of the more common factors are:
Good's own price: The basic supply relationship is between the price of a good and the quantity supplied. According to the Law of Supply, keeping other factors constant, an increase in price results in an increase in quantity supplied.
Prices of related goods For purposes of supply analysis related goods refer to goods from which inputs are derived to be used in the production of the primary good. A related good may also be a good that can be produced with the firm's existing factors of production. For example, suppose that a firm produces leather belts, and that the firm's managers learn that leather pouches for smartphones are more profitable than belts. The firm might reduce its production of belts and begin production of cell phone pouches based on this information.
Conditions of production: The most significant factor here is the state of technology. If there is a technological advancement in one good's production, the supply increases. Other variables may also affect production conditions. For instance, for agricultural goods, weather is crucial for it may affect the production outputs. Economies of scale can also affect conditions of production.
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