Supply

Definition

Supply is the total amount of a specific good or service that is available to consumers. It represents how much the market can offer at various price levels.

5 Must Know Facts For Your Next Test

1. The law of supply states that, all else being equal, an increase in price results in an increase in quantity supplied.
2. A supply curve typically slopes upward from left to right, indicating a direct relationship between price and quantity supplied.
3. Factors affecting supply include production costs, technology, number of sellers, and expectations about future prices.
4. Shifts in the supply curve occur when there are changes in non-price factors such as technological advancements or input prices.
5. Supply elasticity measures how responsive the quantity supplied is to a change in price.

Review Questions

• What does the law of supply state?
• How do changes in production costs affect supply?
• What causes a shift in the supply curve?

Related terms

Demand: The total amount of a specific good or service that consumers are willing and able to purchase at various prices.

Equilibrium Price: The price at which the quantity of a good supplied equals the quantity demanded.

Elasticity: A measure of how much buyers and sellers respond to changes in market conditions.