Quantity supplied is an economic term used to indicate the amount of consumer goods or services available for purchase at a specific price. This term is used in conjunction with the supply and demand curve, which attempts to find the equilibrium point between quantity supplied and quantity demanded. The study of supply and demand is a main tenet of free market economics, which studies the entire economic market of a nation to determine the needs and wants of consumers. This economic concept hinges on the price consumers are willing to pay versus the price companies are willing to sell.
The supply curve on a basic right-angle supply and demand chart starts at the bottom left of the chart and slopes upward and to the right. As the quantity supplied moves up the supply curve, the price increases for the number of available units. This theory states that companies are more willing to supply goods when consumer prices are high. As consumer demand falls, the quantity supplied will fall with prices, since companies must unload overstock of unwanted goods. Changes in demand and price are the main factors for changes in the supply of goods offered by companies.
The demand curve on the supply and demand chart starts at the top right of the chart and slopes down and to the right. The theory behind the demand curve states that consumers are willing to purchase more goods as the price decreases for the quantity supplied of goods and services. Companies are willing to supply more goods to meet consumer demand if economies of scale can be achieved. Economies of scale mean that companies can supply more goods at cheaper prices by producing goods and services in large volumes. The intersect where the supply and demand curves meet is called the equilibrium point.
Equilibrium on the supply and demand curve generally indicates the balance between quantity supplied and quantity demanded. This point means that a balance has been achieved in the economic marketplace as resources have been allocated in a manner that maximizes the profit of companies and the value received by consumers. Supply and demand curves can be used on specific goods, services or entire business industries and sectors. The theory of quantity supplied is an ongoing economic study in the free market system. The size of economic markets and the number of substitute or other goods may also affect the attempts of the marketplace to reach an economic equilibrium between supply and demand.
