what is supply 
supply is a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers supply can relate to the amount available at a specific price or the amount available across a range of prices if displayed on a graph this relates closely to the demand for a good or service at a specific price all else being equal the supply provided by producers will rise if the price rises because all firms look to maximize profits understanding supplythe concept of supply in economics is complex with many mathematical formulas practical applications and contributing factors while supply can refer to anything in demand that is sold in a competitive marketplace supply is most used to refer to goods services or labor one of the most important factors that affect supply is the good s price generally if a good s price increases so will the supply there is often an inverse relationship between the price consumers are willing to pay and the price manufacturers or retailers are wanting to charge the conditions of the production of the item in supply is also significant when a technological advancement increases the quality of a good being supplied or if there is a disruptive innovation such as when a technological advancement renders a good obsolete or less in demand government regulations can also affect supply consider environmental laws regarding the extraction of oil affect the supply of such oil supply is represented in microeconomics by a number of mathematical formulas the supply function and equation express the relationship between supply and the affecting factors a wealth of information can be gleaned from a supply curve such as movements caused by a change in price shifts caused by a change that is not related to the price of the good and price elasticity history of supplysupply and demand in modern economics has been historically attributed to john locke in an early iteration as well as definitively used by adam smith s well known an inquiry into the nature and causes of the wealth of nations published in 1776 the graphical representation of supply curve data was first used in the 1800s and then popularized in the seminal textbook principles of economics by alfred marshall in 1890 1 it has long been debated why britain was the first country to embrace utilize and publish on theories of supply and demand and economics in general the advent of the industrial revolution and the ensuing british economic powerhouse which included heavy production technological innovation and an enormous amount of labor has been a well discussed cause calculating supplythe algebraic formula for supply represents the supply of an item at any given price is q s x y p where q s units supplied x quantity of units y level of activity in the market p price of each unit begin aligned qs x yp textbf where qs text units supplied x text quantity of units y text level of activity in the market p text price of each unit end aligned qs x ypwhere qs units suppliedx quantity of unitsy level of activity in the marketp price of each unit if the price of the item is zero the quantity supplied will be a negative number which indicates no supplier will be willing nor able to produce such a product at a profitable price instead at a higher price more suppliers will be willing to manufacture an item as it becomes more profitable the higher the unit price supply chain issues relate to constraints to delivering goods to the market this may refer to an adequate amount of supply not being able to be manufactured or there being distribution issues in distributing the supply related terms and conceptsthe concept of supply is engrained in many economic concepts below are several associated terms or functions of economics that interact with supply the contrasting economic concept to supply is demand demand represents the consumer s desire to obtain a product when a broad set of consumers are more willing to buy a product or service that product or service is said to have higher demand like supply demand is directly related to a given price for example most consumers would be interested in the latest smartphone if the given market price was 1 increasing the price to 1 000 shifts broad consumer desire for the product all else being equal price and demand are inversely related as one increases the other decreases the supply curve is a graphic representation of the relationship between the cost of an item and the quantity the market will supply at that cost all else being equal the supply curve is upward sloping in that as the price y axis of a good increases more market participants are willing to supply x axis economic equilibrium occurs when supply and demand are equal it is the price point when the supply curve and demand curve overlap at equilibrium the market will agree on the given market price a monopoly is a condition in which one seller controls the supply side of the market government regulation often attempts to control market conditions to ensure fair competition on the supply side this is to ensure consumers are able to buy goods at a fair price instead of a single supplier dictating what the market price will be to avoid a monopoly there must be competition this means different companies must supply similar goods to consumers consumers then must choose which items to buy competition is meant to breed price competition innovation and market control to ensure that a single market participant doesn t have too much power over consumers oversupply occurs when there is an excessive abundance of an item that consumer demand can t satiate consider an abundant harvest that results in an oversupply of crops a result impact may be reduced prices to consumers to further incentivize consumption of this good compared to a scarcer good scarcity is the opposite of oversupply consider a failed crop year ruined by inclement weather because less supply is available it may be more difficult for consumers to obtain a specific good this may be prevalent due to supply chain issues causing manufacturing delays or government policies pausing specific activity suppy elasticityprice elasticity measures how the quantity of goods available will respond to a change in the unit s price an elastic supply means that a small change in market prices will result in a relatively large change in the availability of that good from suppliers an inelastic supply refers to goods whose supply does not change significantly in response to price changes consider a product where a sudden surge of demand causes the price to increase by 10 suppliers of that product may start producing more of that product in order to take advantage of higher profit margins if the supply available increases by more than 10 the good is considered elastic if the supply increase is lower than 10 it is considered relatively inelastic elasticity can be determined from the slope of the supply function a relatively steep supply curve indicates a large response to price changes indicating an elastic supply if the supply curve appears relatively flat then supply is inelastic the elasticity of the supply function at a given point can be expressed by the formula elasticity change in supply change in price begin aligned text elasticity frac text change in supply text change in price end aligned elasticity change in price change in supply if the calculated elasticity is greater than 1 the supply of that good is considered relatively elastic if it is less than one it is considered inelastic goods that are relatively easy to produce and bring to market tend to have an elastic supply since producers can quickly respond to price changes goods whose supply is limited tend to be inelastic for example housing has an inelastic supply since it can take many years to bring new units to the market supply curvebelow is a visual depiction of supply as price y axis increases more market participants are willing to supply the product as this increases profit margin and profitability the slope of the supply curve may be steeper for items with less price sensitivity or more gradual for items more sensitive to price changes 