Supply

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DEFINITION of 'Supply'

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.

INVESTOPEDIA EXPLAINS 'Supply'

Supply and demand trends form the basis of the modern economy. Each specific good or service will have its own supply and demand patterns based on price, utility and personal preference. If people demand a good and are willing to pay more for it, producers will add to the supply. As the supply increases, the price will fall given the same level of demand. Ideally, markets will reach a point of equilibrium where the supply equals the demand (no excess supply and no shortages) for a given price point; at this point ,consumer utility and producer profits are maximized.

RELATED TERMS
  1. Law Of Supply

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  2. Aggregate Demand

    The total amount of goods and services demanded in the economy ...
  3. Supply Shock

    An unexpected event that changes the supply of a product or commodity, ...
  4. Elastic

    A situation in which the supply and demand for a good or service ...
  5. Market Saturation

    When the amount of product provided in a market has been maximized ...
  6. Equilibrium

    The state in which market supply and demand balance each other ...
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