Civics Today: Citizenship, Economics, & You

Chapter 21: Supply

Chapter Overviews

Supply is the amount of a good or service that producers are willing and able to sell. The law of supply states that as the price for a good rises, the quantity supplied also rises. The opposite is also true. In our economy, businesses provide goods and services hoping to make a profit. The profit may be used to increase workers' wages, to invest back into the business, or as extra earnings for the owner(s). Factors affecting supply include the costs of resources, productivity, technology, government policies, and the number of sellers. By looking at supply and demand together, we can arrive at a market price. Prices help businesses and consumers make decisions. They also help answer the basic economic questions—what to produce, how to produce, and for whom to produce.