Legal Definitions - supply

In economics and business, supply refers to the total quantity of a specific good or service that producers are willing and able to offer for sale in a market at a given price during a particular period.

• Example 1 (Product): A local artisanal cheese maker produces 150 wheels of cheddar cheese each week. If the market price for one wheel is $25, the cheese maker's supply of cheddar cheese at that price is 150 wheels per week.

  This example illustrates the specific quantity (150 wheels) of a particular good (cheddar cheese) that a single producer (the cheese maker) is prepared to sell at a defined price ($25) within a set timeframe (weekly).

• Example 2 (Service): A regional plumbing company has enough staff and resources to complete 30 service calls per day. Their supply of plumbing services is 30 calls per day, assuming customers are willing to pay their standard service rates.

  Here, the quantity (30 calls) of a service (plumbing) that a provider (the plumbing company) can offer is defined within a daily period, based on their capacity and an assumed market price.

Aggregate supply refers to the total value of all goods and services that all producers throughout an entire economy are willing and able to produce and offer for sale over a specific period, typically a quarter or a year. It represents the economy's total productive capacity.

• Example 1 (National Output): For the United Kingdom in a given year, the aggregate supply would encompass the total value of all cars manufactured, all financial services provided, all crops harvested, all educational courses delivered, and every other good and service produced by all businesses and individuals within the country's borders during that year.

  This example demonstrates the comprehensive nature of aggregate supply, covering the entire range of goods and services from every sector (manufacturing, services, agriculture, education) produced by all economic actors within a nation over a full year.

• Example 2 (Economic Growth): If a country invests heavily in infrastructure, education, and new technologies, enabling its workforce and industries to become significantly more productive, this would lead to an increase in the nation's aggregate supply over time.

  This illustrates how improvements across the entire economy—affecting all producers and sectors—can expand the total capacity to produce goods and services, thereby increasing the aggregate supply.