Supply

Supply is one of two basic indicators of the modern world market economy (supply and demand), providing information about the entire amount of a certain good or service available to consumers. Displaying the supply on a graph shows the available quantity at a certain price, or the available quantity in a range of prices. This graph is related to the demand for a good or service at a certain price. All producers are looking for increased profits, so their supply will increase when prices rise.

Understanding Supply

Nowadays, the foundation of the world economy is supply and demand. Every good or service has its own price, utility and personal preference. They form their own model of supply and demand. If people are interested in a good or service and are ready to pay more for it, the supply from producers will increase. With the same level of demand, the greater the supply, the lower the price. In a perfect graph, the demand level and the supply level come to an equilibrium point (supply = demand) at a given price, where the consumer's utility and the producer's profit are maximum.

Supply basics

Many mathematical formulas, practical factors, and applications are the foundation of the supply concept. It is a complex concept. Anything that is in demand can be supplied (goods, services, labor). The price of a good affects supply. It is one of the most important factors. The higher the price, the higher the supply. The price of resources (raw materials, energy, labor) and related goods also affects supply. They increase the total cost of the final goods.

Also, the supply is affected by the manufacturing of the product. Technological advances can improve the quality of a product or make it outdated (disruptive innovation). Laws on environmental protection and the number of suppliers (increased competition) are part of government regulation. They can also affect supply and the market. For example, oil and gas production.

In microeconomics, supply is a series of mathematical formulas. The expression of the relationship between supply and the factors influencing it is represented by functions and equations. Inflation rates and other market factors can also be considered as influencing factors. The relationship between the price of a product and its quantity can be expressed by the supply curve. It contains a lot of information, such as price change, shift (not related to the price of the product) and price elasticity.