What is the relationship between the price of a product and the quantity supplied?
What is Quantity Supplied?
You are free to use this image on your website, templates, etc., Please provide us with an attribution linkArticle Link to be Hyperlinked Firms and businesses use it to determine the quantity they need to provide to meet the demand. It directly depends on the pricing of the goods in the market. It means the change in pricing of the goods affects their quantity. When a product is in high demand, then the producer increases supply to meet the demand.
Quantity Supplied ExplainedThe quantity supplied is an economic concept. It means the inclination of producers to produce the goods demanded in the market at a certain period. It depends on the price fluctuation i.e., increases or decreases in the price only if other non-price factors remain constant. Any increase in the product price will also enhance the producer’s profit, so they find a compulsion to produce more to take the market advantage. However, the producer or supplier may face a situation where they must forcefully give up profits or incur losses. Examples include various traded commodities and perishable products, especially if there is an absence of storage. When products and service prices decrease, the amount of supply also decreases. However, a few factors, such as operational cash, constrain the ability to reduce the supply of goods and services during such a situation. Quantity Supplied Schedule And GraphThe law of supply comes into play for quantity supplied. For example, the product’s price increase may lead to more quantity supplied in a market with numerous product or service sellers. Here, the supply schedule table represents the association between the price and the number of products supplied. The supply schedule presents the data of the number of goods or services supplied concerning changes in the prices throughout a specific period when other factors remain constant. You are free to use this image on your website, templates, etc., Please provide us with an attribution linkArticle Link to be Hyperlinked When the goods at prevailing prices completely satisfy the demand, the condition of quality supplied is optimum. Here, Demand = Supply. Economists use graphs to find out this quantity. The X-axis shows the quantity supplied, and the Y-axis plot the prices. The supply curve slopes upwards as producers supply more when prices increase. The point where the supply curve and the demand curve meet are the equilibrium point. At this point, the demand equals supply. If the producers fail to meet the demand while supplying, they incur a loss. Whenever the supply increases, it leads to the shift of the supply curve towards the right. While the supply decreases, the shift in the supply curve is towards the left. If one studies the supply curve and the quantity supplied, one observes that price change affects a movement of change in the latter in the direction of the former. Quantity Supplied FormulaThe quantity supplied formula, which depends on the number of goods and services supplied and the unit prices is: Qs = x + yP Where
For instance, if there is a demand for 500 sunglasses at $5 per piece, then one can write the formula as: Qs = 500 + 5P ExampleHere is the quantity supplied example to explain the concept further: Let us assume Apple manufactures 500 iPhones at $30,000 per piece per week to cater to the customer’s demand. Its competitor decides to increase the price to $35,000 to increase profits. If Apple wants to earn more profits, it can do two things – either increase the selling price or increase the supply of iPhones. In both cases, until the customers do not increase their demand, the shelves of iPhones at the retailers’ shops will be empty. So, if the demand for iPhones increases to 700 pieces per week, the number supplied will also equal 700 pieces. However, if the demand for iPhones decreases to 400 pieces per week, the number of supply will also reduce to 400 pieces as Apple will not want to waste its capital and resources. Supply vs Quantity SuppliedAlthough quantity supplied and supply have similarities, they have significant differences too.
Frequently Asked Questions (FAQs)What is the relationship between price and quantity supplied? According to economists, there is a positive relationship between price and the quantity supplied in accordance with the law of supply. It is possible because a higher price leads to higher quantity supply, and a lower price leads to lower quantity supply. It happens only when other factors affecting supplies do not change. What changes quantity supplied? Demand changes quantity supplied. A movement along the supply curve due to the price variation changes it. Any factor besides price change leads to a change of movement of the complete supply curve, making the change in supply. How to find quantity supplied? To find the quantity supplied – Qs, one needs the values of quantity demanded Qv and the price (P) of the individual unit ‘i’. All these values will be used in the formula of supply, Qs= Qv+iP, to calculate the quantity supply. Recommended ArticlesThis has been a guide to quantity supplied and its definition. We explain the economic concept, schedule & graph, formula, example, and table. You may learn more from the following articles –
What is the relationship between the price and the quantity?Thus, the price of a product and the quantity demanded for that product have an inverse relationship, as stated in the law of demand. An inverse relationship means that higher prices result in lower quantity demand and lower prices result in higher quantity demand.
What is the relationship between the price of a product and the quantity supplied quizlet?What's the relationship between price and quantity supplied? The price of the product and the quantity supplied of that product are related positively. The higher the product's price, the more its producers will supply; the lower the price, the less its producers will supply.
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