Supply
- Supply is what the producers of any type of product provide from the scarce resources available to them
- Through supply, they are aiming to meet the unlimited wants of consumers
- Supply in the market is in the hands of the producers
- This is whether we are dealing with tangible goods (mobile phones, food, clothing) or services
- Supply seeks to satisfy consumers, but the main motives of suppliers are to do with profit
- Economics assumes that the behaviour of a supplier is governed by the consistent need to maximise profits
- The producer’s function is to combine the factors of production together in an efficient and profitable way
- To do this, a producer needs to decide how to use the various factors of production to find the least costly and hence most profitable combination for the output they produce
- With the example of mobile phones, when the producer combines the factors of production, this involves:
- The assembly of components and parts
- Employing skilled labour
- Producing at a suitable location
- Hiring the business skills and contracts to survive
- Supply, therefore, can be increased by producing more or by releasing stocks of goods held in a warehouse