what is quantity supplied 
in economics quantity supplied describes the number of goods or services that suppliers will produce and sell at a given market price the quantity supplied differs from the actual amount of supply the total supply as price changes influence how much supply producers actually put on the market how supply changes in response to changes in prices is called the price elasticity of supply understanding quantity suppliedthe quantity supplied is price sensitive within limits in a free market higher prices generally lead to a higher quantity supplied and vice versa however the total current supply of finished goods acts as a limit as there will be a point where prices increase enough to where it will incentivize the quantity produced in the future to increase in cases like this the residual demand for a product or service usually leads to further investment in the growing production of that good or service 1in the case of price decreases the ability to reduce the quantity supplied is constrained by a few different factors depending on the good or service one is the operational cash needs of the supplier the quantity supplied depends on the price level which can be set by market forces or a governing body by using price ceilings or floors quantity supplied under regular market conditionsthe optimal quantity supplied is the amount that completely satisfies current demand at prevailing prices to determine this quantity known supply and demand curves are plotted on the same graph quantity is on the x axis and price is on the y axis on the supply and demand graphs the supply curve is upward sloping because producers are willing to supply more of a good at a higher price the demand curve is downward sloping because consumers demand less quantity of a good when the price increases the equilibrium price and quantity are where the two curves intersect the equilibrium point shows the price point where the quantity that the producers are willing to supply equals the quantity that the consumers are willing to purchase this is the market equilibrium quantity to supply if a supplier provides a lower quantity it is losing out on potential profits if it supplies a higher quantity not all of the goods it provides will sell factors that impact the supply curvethree key factors impact the supply curve technology production costs and the price of other goods technological improvements can help boost supply making the process more efficient these improvements shift the supply curve to the right increasing the amount that can be produced at a given price now if technology does not improve and deteriorates over time then production can suffer forcing the supply curve to shift left 2as the cost of producing a product increases with all other things being equal then the supply curve will shift leftward less will be able to be produced profitably at a given price thus changes in production costs and input prices cause an opposite move in supply as production costs rise supply falls and vice versa examples of production costs include wages and manufacturing overhead decreases in overhead costs and labor push the supply curve to the right increasing supply as it becomes cheaper to produce the goods 2the price of other goods or services can affect the supply curve there are two types of other goods joint products and producer substitutes joint products are products produced together producer substitutes are substitute goods that can be created using the same resources joint products for example for a company that raises steers are leather and beef these products are produced together there s a direct relationship between the price of a good and the supply of its joint product if the price of leather goes up ranchers raise more steer which increases the supply of beef leather s joint product now for a producer substitute the producer can produce one good or another consider a farmer who can either grow soybeans or corn if the price of corn increases farmers will look to grow more corn decreasing the supply of soybeans thus an inverse relationship exists before a good s price and the supply of the producer s substitute market forces and quantity suppliedmarket forces are generally seen as the best way to ensure the quantity supplied is optimal as all the market participants can receive price signals and adjust their expectations that said some goods or services have their quantity supplied dictated or influenced by the government or a government body in theory this should work fine as long as the price setting body has a good read of the actual demand unfortunately price controls can punish suppliers and consumers when they are not set at rates that approximate a market equilibrium if a price ceiling is set too low suppliers are forced to provide a good or service that may not return the cost of production including a normal profit this can lead to losses and fewer producers if a price floor is set too high particularly for critical goods consumers are forced to use more income to meet their basic needs in most cases suppliers want to charge high prices and sell large amounts of goods to maximize profits while suppliers can usually control the number of goods available on the market they do not control the demand for goods at different prices as long as market forces are allowed to run freely without regulation or monopolistic control by suppliers consumers share control of how goods sell at given prices consumers want to be able to satisfy their demand for products at the lowest price possible if a good is fungible or a luxury then consumers can curb their buying or seek alternatives this dynamic tension in a free market ensures that most goods are cleared at competitive prices example of quantity suppliedconsider a carmaker green s auto sales that sells automobiles the carmaker s competitors have been raising prices leading into the summer months the average car in their market now sells for 25 000 versus the previous average selling price of 20 000 green s decides to increase its supply of cars to boost profits leading up to the summer months it was selling 100 cars per month earning 2 million in revenue the cost to make and sell each car was 15 000 making green s net profit 500 000 with the average selling price up to 25 000 the new net profit per month is 1 million thus raising the quantity supplied of cars will increase green s profits 