Summary on Concept of Supply
In economics, supply refers to the quantity of a commodity that producers are willing and able to offer for sale at different prices over a given period, while stock denotes the total quantity produced during that period minus what has already been sold. Typically, producers do not release their entire stock to the market immediately; they often retain a portion to sell at higher prices during off-seasons or when demand increases. Therefore, supply can be less than or equal to the stock. The quantity supplied is the amount producers are willing to sell at specific prices, illustrating the direct relationship between price and the amount offered for sale, as per the law of supply, which states that higher prices lead to higher quantities supplied. A supply schedule tabulates different quantities that will be sold at various prices, while a supply curve graphically represents this relationship. The supply function mathematically models this relationship as QS=f(P), where QS is the quantity supplied and Pis the price. Market supply aggregates the quantities supplied by all producers at each price, depicted by the horizontal summation of individual supply curves. This aggregate supply is shown in a market supply schedule and curve, demonstrating how individual suppliers’ contributions combine to form the total market supply at different price levels.