Supply is selling that producers can deliver
Definition
Supply: the quantity of a good or service that producers are willing and able to sell at a given price over a period of time.
Quantity supplied: the single amount producers would offer at one particular price, taken out of that whole set of selling plans.
- Willing and able are two separate tests for a producer, exactly as they are for a buyer in 2.2.1.
- A firm that would like to sell more but has no capacity to make it is not supplying that quantity.
- Supply is therefore the selling side of the market described in 2.1.1, and it comes from producers rather than consumers.
Supply records a plan, not what is sold
- A supply schedule sets out what firms intend to offer at each price, before any buyer has agreed to anything.
- How much is actually sold depends on demand as well, which is why the amount traded is settled in 2.4.2 and not here.
- Like demand, supply is a flow, so every figure carries a period such as litres a day or tonnes a year.
Common Mistake
- Do not use supply to mean the stock a firm is holding, since supply is a rate of offering for sale rather than a pile of goods.
- Do not write that a price rise increases supply, because a price rise increases the quantity supplied and leaves supply itself alone.
Firms supply in order to make a profit
- A producer offers a unit for sale when the price covers the cost of making it and leaves something over.
- Anything that changes the profit on a unit therefore changes how much a firm will supply, which is the thread running through 2.3.5.
- Profit is what links supply to costs and revenue in 2.6.5, so supply is a business decision rather than a rule of nature.
Example
- The UK average farmgate milk price was 35.0p a litre in July 2026, 20% lower than a year earlier (Source: Defra).
- That price is what a dairy farm weighs against the cost of producing each litre when deciding how much to offer.
- A fall of that size squeezes the profit on every litre, which is why a price change reaches production decisions so quickly.
Supply and demand together make a market
- Supply describes what producers plan to do and demand describes what consumers plan to do, so neither on its own is a market.
- Producers are one of the three economic groups in 1.1.1, and supply is what they bring to the market.
Exam technique
- Include willing and able in a definition of supply, because a definition that says only what firms would like to sell is incomplete.
- Keep supply and quantity supplied apart in your wording, since the two are marked as different things.
Self review
- Define supply in one sentence.
- What is the difference between supply and quantity supplied?
- Why is supply described as a plan rather than as sales?
- Why does a fall in the price a farm receives affect how much it produces?
- Which of the three economic groups does supply come from?
