3.04 Supply

Introduction

To understand demand, you simply act like a consumer. This was relatively easy to do. To understand supply however, you need to act like a supplier or producer of a product. This is difficult for students to do because few of any of you see yourselves as business owners! Try instead to consider that you are a future employee who is selling your education, skills, and experience.

• Would you offer to go to work for $1.00 a day? No way, you would say!
• Would you offer to go to work for $1,000 a day? Gladly, you would say!

Congratulations! You have just learned the Law of Supply: When the price is low, you do not supply a product, but when the prices is high, you supply the product.

Supply describes the total amount of a specific product that is available to consumers at all possible prices. Generally, individuals or companies that sell the product will offer more of it as its price increases.

In this lesson, you will learn the difference between supply and quantity supplied. You will also learn about the different types of supply curves and the difference between movement along the curve due to price and movement (shift) of the curve due to non-price determinants of supply.