Science, Tech, Math › Social Sciences Examples of Supply in Economics Share Flipboard Email Print Lucas Schifres/Getty Images News/Getty Images Social Sciences Economics Supply & Demand U.S. Economy Employment Psychology Sociology Archaeology Environment Ergonomics Maritime by Mike Moffatt Mike Moffatt is an economics writer and instructor who has written hundreds of articles and taught at both the university and community college levels. Updated December 23, 2018 Supply is defined as the total amount of a given product or service that is available for purchase at a set price. This core component of economics may seem vague, but you can find examples of supply in everyday life. Definition The law of supply states that assuming all else is held constant, the quantity supplied for a good rise as the price rises. In other words, the quantity demanded and the price is positively related. The relationship between supply and demand can be illustrated like this: Supply Demand Price Constant Rises Rises Constant Falls Falls Increases Constant Falls Decreases Constant Increases Economists say supply is determined by several factors, including: Price Buyers want to pay as little as possible for a good or service, while producers want to maximize profit by charging as much as possible. When supply and demand are balanced, price tends to be stable Cost The less it costs to manufacture a good, the greater a producer's profit margin when that good is marketed at a specific price point. As the cost of production decreases, the more product a manufacturer can produce. Competition Manufacturers may be compelled to lower the price of their goods in order to match the price of similar products offered by a competitor, thus lowering profits. Likewise, producers will seek the lowest price on raw materials, which can, in turn, affect suppliers. Supply and demand do fluctuate over time, and both producers and consumers can take advantage of this. For example, consider season demand on clothing. In the summertime, the demand for swimsuits is very high. Producers, anticipating this, will ramp up production in the winter in order to meet demand as it increases from spring into summer. But if consumer demand is too high, the price on swimwear will rise because it will be in short supply. Likewise, in the fall retailers will begin clearing out excess inventory of swimsuits to make room for cold-weather clothing. Consumers will find prices reduced and save money, but their choices will be limited. Elements of Supply There are additional factors that economists say can affect supply and inventory. Specific quantity is the amount of a product that a retailer wants to sell at a given price is known as the quantity supplied. Typically a time period is also given when describing quantity supplied For example: When the price of an orange is 65 cents the quantity supplied is 300 oranges a week.If the price of copper falls from $1.75/lb to $1.65/lb, the quantity supplied by a mining company will fall from 45 tons a day to 42 tons a day. A supply schedule is a table which lists the possible prices for a good and service and the associated quantity supplied. The supply schedule for oranges could look (in part) as follows: 75 cents - 470 oranges a week70 cents - 400 oranges a week65 cents - 320 oranges a week60 cents - 200 oranges a week A supply curve is simply a supply schedule presented in graphical form. The standard presentation of a supply curve has price given on the Y-axis and quantity supplied on the X-axis. Price elasticity of supply represents how sensitive quantity supplied is to changes in price. Sources Investopedia staff. "Law of Supply." Investopedia.com.McIntyre, Shawn. "Economics for Beginners." Owlcation.com, 30 June 2016. Continue Reading Do You Know How to Read a Supply Curve to Understand the Market? Introduction to Elasticity in Economics Understanding Subsidy Benefit, Cost, and Effect on the Market Why Is the Supply and Demand Model Such a Big Deal? What Is a Commodity in Economics? Test Your Economics Knowledge With 10 Supply and Demand Questions Overview of the Economics of Demand Guide to the Supply and Demand Equilibrium Cost of Production Versus Cost to Society Understand the Economics of Supply and Demand Economics Lesson: The Demand Curve Explained Will the World Ever Run Out of Oil? How to Calculate an Equilibrium Equation in Economics Defining and Explaining Price Elasticity of Supply What Are the Determinants of Supply? What Is Inflation?