Economics – The allocation of resources - Supply | e-Consult

Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at a given price during a specific period of time. It's crucial to understand because supply, along with demand, determines the market equilibrium price and quantity.

Understanding supply allows us to analyse how changes in factors other than price (e.g., input costs, technology, expectations) can shift the supply curve. A shift in the supply curve will lead to a new equilibrium price and quantity. For example, if input costs increase, the supply curve will shift to the left, resulting in a higher equilibrium price and lower equilibrium quantity. Conversely, advancements in technology can shift the supply curve to the right, leading to a lower equilibrium price and higher equilibrium quantity. Therefore, a clear understanding of supply is fundamental to predicting market outcomes and analysing the effects of economic changes.