What is Supply?
“Supply” refers to the quantity of a particular product or resource that is available for purchase, consumption, or use at a given point in time. It is a fundamental concept in economics and business that plays a crucial role in determining prices and influencing market dynamics.
In economic terms, the relationship between supply and demand is a fundamental driver of prices in a market. When supply exceeds demand, prices tend to decrease, while when demand exceeds supply, prices tend to increase. This interaction is central to the functioning of market economies. Understanding supply and its factors is essential for businesses, policymakers, and economists as they make decisions related to production, pricing, and resource allocation.
What is Quantity Supplied?
Quantity supplied refers to the specific amount of a product or service that producers or suppliers are willing and able to offer or sell in a market at a particular price during a given period of time. It is one of the key concepts in economics and plays a crucial role in determining the equilibrium price and quantity in a market.
The most significant factor affecting the quantity supplied is the price of the product. Generally, as the price of a product increases, producers are willing to supply more of it because they can potentially earn higher profits. This relationship is represented by the law of supply, which states that all else being equal, the quantity supplied of a good or service increases as its price rises and decreases as its price falls.
Difference Between Supply and Quantity Supplied
- Supply refers to the entire range of quantities of a specific product or service that producers are willing and able to provide at various prices over a given period, taking into account all possible price levels. Quantity supplied, on the other hand, represents a specific quantity of a product that producers are willing to provide at a particular price point at a specific moment in time.
- Supply is a broader concept that encompasses all possible price-quantity combinations for a product or service. It involves analyzing how the quantity supplied changes in response to changes in price, among other factors. Quantity supplied is a single data point on the supply curve, representing the amount of a product that suppliers are willing to sell at a specific price level.
- Supply is a dynamic concept that can change over time in response to various factors, such as shifts in production capacity, changes in technology, and shifts in production costs. Quantity supplied is a static concept that represents a specific point on the supply curve at a given moment. It doesn’t consider changes over time.
- Supply is represented as a supply curve on a graph, showing how the quantity supplied changes as the price of a product changes. It’s a graphical representation of the entire supply relationship. Quantity supplied is a specific point on the supply curve, represented by a single data point or coordinate on the graph.
- Supply, along with demand, determines the equilibrium price and quantity in a market. When the supply curve intersects with the demand curve, it establishes the market equilibrium. Quantity supplied is a component of the supply curve and contributes to determining the quantity exchanged at the equilibrium price.
Comparison Between Supply and Quantity Supplied
| Parameters of Comparison | Supply | Quantity Supplied |
|---|---|---|
| Definition | The entire range of quantities producers are willing to provide at various prices over a given period. | A specific quantity provided at a particular price point at a specific moment. |
| Scope | Broader concept, representing the entire supply relationship across different price levels. | Narrower concept, representing a single data point on the supply curve. |
| Responsiveness to Changes | Can change over time due to shifts in production capacity, technology, and production costs. | Static at a given moment, doesn’t consider changes over time. |
| Graphical Representation | Shown as a supply curve on a graph, illustrating the supply relationship across price and quantity. | Represented as a single point on the supply curve, a specific quantity at a specific price. |
| Role in Market Equilibrium | Determines both the equilibrium price and quantity when it intersects with the demand curve. | Contributes to determining the quantity exchanged at the equilibrium price, which is determined by the intersection of supply and demand. |
- https://www.sciencedirect.com/science/article/pii/S0921344912001395
- https://www.journals.uchicago.edu/doi/abs/10.5950/0738-1360-27.2.165
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