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# Quantity Supplied

Updated on January 31, 2024
Article byKhalid Ahmed
Edited by
Reviewed byDheeraj Vaidya, CFA, FRM

## What is Quantity Supplied?

Quantity supplied refers to the willingness of manufacturers to produce a certain number of goods or services for sale as per the prevalent market demand. It serves the significant purpose of controlling the wastage of capital, resources, and goods by producing the desired supply level for the goods.

For eg:
Source: Quantity Supplied (wallstreetmojo.com)

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.

### Key Takeaways

• The quantity supplied for a good or service is the quantity the sellers or producers are willing to increase or decrease the supply for a particular price at a particular time. All other factors other than price remain constant.
• The law of supply is an integral part of this concept as, in a free market, whenever there is a price change, the supply curve observes a shift/movement.
• Its formula is Qs = x + yP, which is also written as Qs = Qv+iP
• It is different from the supply because, in economics, supply is a generic term. In contrast, the term quantity supplied is used only when a certain price change encourages the producer to increase or decrease supply to make a profit.

### Quantity Supplied Explained

The 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.

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### Quantity Supplied Schedule And Graph

The 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.

For eg:
Source: Quantity Supplied (wallstreetmojo.com)

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 Formula

The 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

### Example

Here 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 Supplied

Although quantity supplied and supply have similarities, they have significant differences too.

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.
Factors such as elasticity of supply and demand, regulations by the government, and fluctuation in raw material and input cost also influence the supplied quantity.

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.
The supply will be optimum when the market is at equilibrium. The equilibrium point is also plotted on a graph. It is a point where the demand and supply curves intersect.

This 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 –