Supply

AAA

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.

VIDEO

Loading the player...
RELATED TERMS
  1. Law Of Supply

    A microeconomic law stating that, all other factors being equal, ...
  2. Equilibrium

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

    An economic principle that describes a consumer's desire and ...
  4. Substitute

    A product or service that satisfies the need of a consumer that ...
  5. Aggregate Supply

    The total supply of goods and services produced within an economy ...
  6. Supply Management

    A broad term describing the various acts of identifying, acquiring ...
Related Articles
  1. Economics

    What Is Supply?

    Supply is the amount of goods a producer is willing to produce at a given price, and is one of the most basic concepts in economics.
  2. Economics

    Understanding Supply-Side Economics

    Does the amount of goods and services produced set the pace for economic growth? Here are the arguments.
  3. Active Trading

    Why You Can't Influence Gas Prices

    Don't believe the water-cooler talk. Big oil companies aren't to blame for high prices.
  4. Insurance

    The Minimum Wage: Does It Matter?

    Despite paying one of the highest minimum wages in the world, the minimum wage is a perpetual hot potato among politicians in the United States.
  5. Home & Auto

    Top 4 Things That Determine A Home's Value

    Your house depreciates over time, while the land beneath it is likely to do the opposite.
  6. Stock Analysis

    The Top Performing Airlines Right Now

    Learn about the airline industry and its top-performing companies. Understand these top-emerging airlines and why they have taken more market share.
  7. Economics

    Understanding the Product Life Cycle

    Product life cycle is the period of time during which a product is conceived and developed, brought to market and eventually removed from the market.
  8. Economics

    What's a Centrally Planned Economy?

    A centrally planned economy is one where the government controls the country’s supply and demand of goods and services.
  9. Economics

    What are Barriers to Entry?

    A barrier to entry is any obstacle that restricts or impedes a company’s efforts to enter an industry.
  10. Economics

    Explaining Aggregate Supply

    Aggregate supply is the total supply of goods and services an economy produces in a given time period.
RELATED FAQS
  1. How do government subsidies help an industry?

    Government subsidies help an industry by paying for part of the cost of the production of a good or service by offering tax ... Read Full Answer >>
  2. Who are Toyota's (TYO) main suppliers?

    As the world’s biggest car manufacturer with more than 10 million cars sold in 2014, Toyota Motor Corp. has a diverse supply ... Read Full Answer >>
  3. Who are Family Dollar's (FDO) main competitors?

    North Carolina-based Family Dollar (FDO) is one of the biggest discount retailers in North America. Competitors include companies ... Read Full Answer >>
  4. Do businesses in states with right-to-work laws have demonstrably less deadweight ...

    Deadweight loss from union activity is believed to represent as much as 0.04% of the gross domestic product (GDP) as of 2 ... Read Full Answer >>
  5. How does the law of supply and demand affect the oil industry?

    The law of supply and demand primarily affects the oil industry by determining the price of oil. The price, and expectations ... Read Full Answer >>
  6. Is demand or supply more important to the economy?

    Supply and demand are both key to economic activity. The two influence each other and impact prices of consumer goods and ... Read Full Answer >>
  7. What factors influence a change in supply elasticity?

    The elasticity of supply measures the percentage change in supply due to a change in another factor. It refers to how the ... Read Full Answer >>
  8. How does the law of supply and demand affect the housing market?

    The law of supply and demand is a basic economic principle that explains the relationship between supply and demand for a ... Read Full Answer >>
  9. How does the law of supply and demand affect prices?

    The law of supply and demand is an economic theory that explains how supply and demand are related to each other and how ... Read Full Answer >>
  10. What is the difference between price inelasticity and inelasticity of demand?

    These two measurements are interrelated, and are used in conjunction to understand market production and purchasing. Price ... Read Full Answer >>
  11. What causes a significant move in the stock market?

    There is a nearly infinite number of factors that can cause the stock market to move significantly in one direction or another. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Dog And Pony Show

    A colloquial term that generally refers to a presentation or seminar to market new products or services to potential buyers.
  2. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  3. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  4. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  5. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  6. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!