What is Quantity Supplied?

What is Quantity Supplied?

Definition

Quantity supplied is a term used in economics that signifies the quantity of a good or service that will be supplied at a specific price. As a general rule, a higher price will result in a greater volume of supply and a lower price will mean that the quantity supplied will fall

What does quantity supplied mean?

The concept of quantity supplied assumes significance as it allows a business to decide the volume of production at different price points. If a business is producing and selling 100 units at a rate of $10 each, the quantity supplied at this price is 100. But how much would the company be willing to supply at a higher price of, say, $12? It is likely that it would raise the quantity supplied

The firm could make a projection and arrive at a target of 120 units. So, at a higher price of $12, the quantity supplied would rise to 120 units. Remember that the quantity supplied always refers to the number of units of a good at a specific price point

The quantity supplied increases with an increase in the price of a product. The opposite is also true, as the quantity supplied will fall if the price drops. Suppliers would be willing to provide less of a good at a lower price

Example of quantity supplied

Let us understand what quantity supplied means by examining a supply curve. The illustration provided below shows the different quantities that will be supplied at varying price points

Quantity Supplied            







At a price of $10, the quantity supplied is zero. When the price rises to $20, the quantity supplied increases to about 80 units. Subsequently, as the price increases, the quantity supplied rises. At a price of $100, the quantity supplied is about 500 units

Summary

The quantity supplied refers to the number of units of a good that will be supplied at a particular price point. An increase in price will result in a rise in the quantity supplied while a fall in price will lead to a reduction in the quantity supplied.