Supply

We have all heard of Supply & Demand, the holy grail of basic Economics. But, leaving Demand for later, what is Supply? What dictates if it increases or decreases?

Quantity Supplied vs. Supply

Supply can be divided into Quantity Supplied and Supply:

• Quantity Supplied is the number of things produced
• Supply is the line that indicates how the Amount Supplied changes with price

As you can see, if the price increases, the Quantity Supplied will also increase, but Supply stays the same.

Law of Supply

This graphic is created by the Law of Supply, that says:

The Amount Supplied increases with price, because, if the price for a product is higher, all else being equal, more of that product will be produced and supplied.

On the next post we'll take a look at what changes Supply, making it increase or decrease!

Also check out the previous post!