Supply

“Keeping all other things constant, supply can be defined as the quantity of a good that the firms are able and willing to make available for sale at a certain price during a specific period of time.”

It is not only made by manufacturers of goods but also by owners of resources (such as land, labor, etc.). From the perspective of resource suppliers, it can be defined as the quantity of resources that resource owners are able and willing to provide/render during one year at a specific price, provided that other things remain constant.

To constitute supply, both the willingness and the ability to provide must be present. Thus if a producer is willing to produce 4,000 units of a product available for sale each day but his production capacity is only 2,000 units per day, his supply will be 2,000 units instead of 4,000 units.

Economists usually present supply information as a series of quantity supplied levels at different prices in a table called supply schedule. Its schedule when plotted produces a positively sloped curve called the supply curve as against the demand curve which is negatively sloped (see article Supply and Demand for more details). The market will be in equilibrium when both curves cross each other.

Example

The following table shows the number of trousers supplied by a hypothetical producer C at different prices during one year.

Price
Per trouser
Number of
trousers Supplied
$550
$10100
$15150
$20200
$25250

The above data shows that 50 units are supplied at a price of $5 per unit, 100 units at a price of $10 per unit, and so on. You can also notice that the annual trousers supplied increase as the unit price increases. This is because of well know microeconomic law called the law of supply.

Mudassir

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