INTRODUCTION TO SUPPLY

Supply and Quantity Supplied

Supply is a fundamental economic concept that describes the total amount of a specific good
or service that is available to consumers.  It is the amount of good or service a producer is
willing to supply at each price.

The quantity supplied of a good or service is the quantity sellers are willing to sell at a particular
price during a particular period, all other things unchanged. Ceteris paribus, the receipt of a
higher price increases profits and induces sellers to increase the quantity they supply. Price is
what the producer receives for selling one unit of a good or service. A rise in price almost
always leads to an increase in the quantity supplied of that good or service, while a fall in price
will decrease the quantity supplied. 

When economists refer to supply, they mean the relationship between a range of prices and the
quantities supplied at those prices—a relationship that can be illustrated with a supply curve or
a supply schedule. When economists refer to quantity supplied, they mean only a certain point
on the supply curve, or one quantity on the supply schedule. In short, supply refers to the curve,
and quantity supplied refers to a specific point on the curve.

BASIS FOR
SUPPLY QUANTITY SUPPLIED
COMPARISON

Meaning Supply implies the overall Quantity supplied is the amount of

relationship amidst different prices product offered for sale in a given
and quantity supplied at each price. period at a particular price.

Represents How much the market can offer. Amount of good made available by
the producers when receiving a
certain price.

Reflected by Supply schedule or supply curve Point given on supply curve

Change is a result Change in non-price determinants Change in price

of

Change is Shift of entire supply curve Movement along the supply curve
indicated by

Source: https://keydifferences.com/difference-between-supply-and-quantity-supplied.html
Law of Supply

The law of supply states that, all other factors being equal, as the price of a good or service
increases, the quantity of goods or services that suppliers offer will increase, and vice versa.
The law of supply says that as the price of an item goes up, suppliers will attempt to maximize
their profits by increasing the quantity offered for sale.

The law of supply states that there is a positive relationship between price and quantity
supplied, leading to an upward-sloping supply curve.

Supply Schedule and Supply Curve

A supply schedule is a table that shows the relationship between the price of a good and the
quantity supplied.

A supply curve is a graph that illustrates the relationship of price to the quantity supplied. It
considers the relationship between the price and available supply of an item from the
perspective of the producer rather than the consumer.

Source: https://www.thoughtco.com/introduction-to-the-supply-curve-1147940

Remember supply is the relationship between a range of prices and the quantities supplied at
those prices, a relationship that can be illustrated with a supply curve or a supply schedule.
When economists refer to quantity supplied, they mean only a certain point on the supply
curve, or one quantity on the supply schedule. In short, supply refers to the curve and quantity
supplied refers to the (specific) point on the curve.

Determinants of Supply

1. Price of a product or service

The price of the product or service is the most evident factor in determining supply. If all other
variables remain constant, the supply of a product will increase if its relative price rises. A
company provides goods or services in order to generate a profit, and when prices increase, so
does supply to increase profits. Hence, increasing the supply of a product is motivated by a
price rise.

2. Price of other goods

If a business can produce more than one type of product with its resources, then it tends to
produce more higher-profit products and less of other products. Such as substitution production
will reduce the supply of the other items that a producer can provide.

3. Price of the factors of production/ Input prices

If resource prices (inputs) increase faster than the supply prices, then producers will have less
incentive to produce more. Likewise, when the price of inputs falls then the profits increase for
the same price level, so sellers will produce more.

4. Improvement in technology

Innovations and inventions in technology typically allow for the production of higher-quality
and/or greater quantities of things with the same number of resources.

5. Expectations of price

If suppliers anticipate a price reduction in the near future, they may attempt to liquidate all of
their current stock. Similarly, if suppliers anticipate that prices will rise in the future, they may
hang on to their inventory until prices rise.

6. The number of sellers

The market supply is simply the sum of the supply of each individual seller—more sellers
entering the market increases supplies while departing seller decrease supply.

Change in Quantity Supplied and Movement Along the Supply Curve

A change in quantity supplied is the change in the quantity a producer is willing to supply when
there has been a change in the market price of the good or service it sells. 
A movement from one point to another along the same supply curve is referred to as a "change
in quantity supplied." Changes in quantity supplied are due to changes in price.

Change in Supply and Shift in the Supply Curve

Change in supply refers to a shift, either to the left or right, in the entire price-quantity
relationship that defines a supply curve. A change in supply can occur as a result of non-price
determinants such as new technologies, such as more efficient or less expensive production
processes, or a change in the number of competitors in the market.
Change in Quantity Supplied and Change in Supply

Source: https://www.higherrockeducation.org/glossary-of-terms/change-in-quantity-
supplied#:~:text=A%20change%20in%20quantity%20supplied,good%20or%20service%20it
%20sells.

Therefore, a movement along the supply curve will occur when the price of the good changes
and the quantity supplied changes in accordance to the original supply relationship. In other
words, a movement occurs when a change in quantity supplied is caused only by a
change in price, and vice versa.
Meanwhile, a shift in a supply curve occurs when a good's quantity supplied changes
even though price remains the same. 

Equilibrium

Equilibrium is the state in which the market supply and demand are balanced resulting to a
stable price.
source: https://www.tes.com/lessons/Vpy_gNIbGN9jjg/economics

The equilibrium price is the only price where the plans of consumers and the plans of
producers agree—that is, where the amount of the product consumers want to buy (quantity
demanded) is equal to the amount producers want to sell (quantity supplied).  This common
quantity is called the equilibrium quantity. At any other price, the quantity demanded does not
equal the quantity supplied, so the market is not in equilibrium at that price.

At any above-equilibrium price, the quantity supplied exceeds the quantity demanded. We call
this an excess supply or a surplus. When the price is below equilibrium, there is excess
demand, or a shortage—that is, at the given price the quantity demanded, which has been
stimulated by the lower price, now exceeds the quantity supplied, which had been depressed by
the lower price. 

Sources:
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Rittenberg L and Tregarthen T. (2009). Principles of Microeconomics. Flatworld Knowledge, Inc.
Frakt A. and Piper P. (2014). Microeconomics Made Simple. Simple Subjects, LLC.https://openstax.org/

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%20to%20a%20shift%2C%20either%20to%20the,higher%20or%20lower%20supply%20price.