Supply is the amount of something that firms, consumers, laborers, providers of financial assets, or other economic agents are willing to provide to the marketplace. In the goods market, supply is the amount of a product per unit of time that producers are willing to sell at various given prices when all other factors are held constant. In the labor market, the supply of labor is the amount of time per week, month, or year that individuals are willing to spend working, as a function of the wage rate. In the financial markets, the money supply is the amount of highly liquid assets available in the money market, which is either determined or influenced by a country's monetary authority.
According to R.G Lipsey, "The amount of a commodity that firms are able and willing to offer for sale is called the quantity supplied of that commodity."
Determinants of supply/ Factors affecting supply:
- Price of factors of production
- Price of other commodities
- Goals of firms (Profit maximization or Sales maximization)
- State of technology
- Effects of taxation and subsidy
- Government regulations and policies
- Good's own price
- Number of suppliers
- Future price expectations
If this article has helped you, please leave a comment.