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THE CONCEPT OF SUPPLY
What is the economic principle of supply?
Supply is “a stock of a resource from which a person or place can be provided with the
necessary amount of that resource.”
Based on Investopedia, “Supply is 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.
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.”
Sources:
Investopedia Team. (2020, October 29). Law Of Supply Definition. Investopedia.
https://www.investopedia.com/terms/l/lawofsupply.asp
Kenton, W. (n.d.). Supply. Investopedia. Retrieved August 29, 2021, from
https://www.investopedia.com/terms/s/supply.asp
Khan Academy. (n.d.). What factors change supply? (article). Retrieved August 29, 2021, from
https://www.khanacademy.org/economics-finance-domain/microeconomics/supply-demand-
equilibrium/supply-curve-tutorial/a/what-factors-change-supply

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