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Supply is the ability and willingness of firms to provide goods and services at given price levels. Firms will have more incentives to supply their products at higher prices — the higher the price, the greater supply tends to be. There are two reasons for this positive relationship between price and supply :
Existing firms can earn higher profits if they supply more.
New firms are able to join the market if the higher price allows them to cover their production costs.
Determinants Of Supply
Although price is regarded as the key determinant of the level of supply of a good or service, it is not the only factor that affects the quantity supplied. Non-price factors that affect the level of supply of a product
Time - The shorter the time to produce goods the shorter the supply is, suppliers take time to get goods created, for example : farmers have agriculture but it takes time to get those crops but its possible to increase the number of crops build.
Weather - the supply of certain goods and services can depend on the weather: for example, favorable weather conditions will shift the supply of agricultural output to the right.
Opportunity Cost - Price acts as a signal to producers to allocate their resources to the provision of goods and services with a greater level of profits.
Price And Supply
The law of supply states that there is a positive relationship between price and the quantity supplied of a product.
Hence, a supply curve is drawn as upward sloping from left to right. As the price increases from P1 to P2, the quantity supplied rises from Q1 to Q2.
Movements along a supply curve
A movement along a supply curve occurs only if the price of the product changes. A change in price alone causes a change in the quantity supplied.
There is an extension in supply if price increases. A contraction in supply occurs if the price of the product falls