Supply (economics)

Under Offer is understood in economics generally, the amount of each type of goods or services that give away a single economic actor or a majority of actors at a certain price in exchange for cash or other goods and services interested and ready.

This primary definition of supply presupposes the notion of homogeneity of the considered Guts, is the only way of different quantities of a good speech can be and the only way to offer different actors can be summarized in terms of quantity and in the requested quality. In a derivative sense one speaks also of the aggregate ( combined ) offer various goods as an entire industrial sectors or the economy as a whole, which is determined as the sum of the rated supply price of the individual goods. According to this so certain aggregate supply associated price is determined as weighted with the given structure of supply average price.

Business and Economics exposition

In economics, it is usually assumed that - ceteris paribus - a systematic relationship between the prices and quantities of goods offered there. The volume of goods offered is considered dependent ( as a function ) the price per unit. This relationship is illustrated in supply functions or supply curves that assign each price, the quantity of goods offered at this price.

It is based on a range of law and a law of demand.

After offering a law increasing price increases the supply. So the offer curves are rising ( law of supply ). While there is a growing course of the supply curves for the supply of goods of a company under suitable assumptions ( in particular the adoption of declining returns to scale ) of the neoclassical theory of the firm can be derived, followed by the rising supply of factors of production ( such as wage labor ) not from the neoclassical theory of households. Whether we can observe a falling with wages labor supply and empirically, for example, is controversial.

According to the law of demand generally increases the demanded quantity of goods, if the price of goods decreases and, conversely, the demanded quantity of goods from when the price goes up.

Economic Analysis of supply concept

In the economic analysis is to be noted that with increasing degree of aggregation (ie, are summarized the more individual actors and individual goods), which is always problematic ceteris paribus clause because just can not be assumed that other circumstances (income, supply structure ) remain unaffected by the represented in an aggregate supply function or curve changes in prices and quantities supplied. This difficulty circumvent general equilibrium models.

For some goods, a distinction the individual offer of a good by a single actor with the offer, which is determined by the addition of the offer to all providers of the corresponding good.

Supply and price theory

In the neoclassical price theory it is assumed that under competitive conditions ( partialanalytisch ) the current price of a good is determined by the intersection of aggregate supply and aggregate demand curve for this good. In the general equilibrium analysis, the prices of all goods are determined by the simultaneous identification of the total supply and total demand in all markets.

Supply function

The (short-term ) supply function shows in microeconomics for alternative product prices ( under perfect competition can not affect the company takers ) each profit-maximizing production volumes. It is the ascending branch of the marginal cost function starting in the operating minimum and is derived from the price - marginal cost rule. Price setting end companies have no supply function.

The supply curve of an industry is derived by aggregating the supply functions of individual companies. With the maturity of viewing the elasticity of supply increases.