definition for supply

Definition of Supply

The total amount of goods or services available for purchase at any specified price is known as supply.

Explanation of Supply

It is determined by following factors.

Producers will try to get the highest possible price but the buyers will try to pay the lowest possible price both settling at the equilibrium price where supply equals demand.

Cost of inputs: If the input price is lower the input than the profit will be higher.

Price of substitutes: Lower prices of substitute goods will reduce the price and the supplier may switch to more profitable products thus reducing the supply.

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