Supply in economics

History of ‘Supply’
Supply in economics and finance is often, if not always, associated with demand. The law of supply and demand is a fundamental and foundational principle of economics. The law of supply and demand is a theory that describes how supply of a good and the demand for it interact. Generally, if supply is high and demand low, the corresponding price will also be low. If supply is low and demand is high, the price will also be high. This theory assumes market competition in a capitalist system. Supply and demand in modern economics has been historically attributed to John Locke in an early iteration, as well as definitively used by Adam Smith’s well-known “An Inquiry into the Nature and Causes of the Wealth of Nations,” published in 1776.
The graphical representation of supply curve data was first used in the 1800s, and then popularized in the seminal textbook “Principles of Economics” by Alfred Marshall in 1890.1 It has long been debated why Britain was the first country to embrace, utilize and publish on theories of supply and demand, and economics in general. The advent of the industrial revolution and the ensuing British economic powerhouse, which included heavy production, technological innovation and an enormous amount of labor, has been a well-discussed cause.
Related Terms & Concepts
Related terms and concepts to supply in today’s context include supply chain finance and money supply. Money supply refers specifically to the entire stock of currency and liquid assets in a country. Economists will analyze and monitor this supply, formulating policies and regulations based on its fluctuation through controlling interest rates and other such measures. Official data on a country’s money supply must be accurately recorded and made public periodically. The European sovereign debt crisis, which began in 2009, is a good example of the role of a country’s money supply and the global economic impact.
Global supply chain finance is another important concept related to supply in today’s globalized world. Supply chain finance aims to effectively link all tenets of a transaction, including the buyer, seller, financing institution—and by proxy the supplier—to lower overall financing costs and speed up the process of business. Supply chain finance is often made possible through a technology-based platform, and is affecting industries such as the automobile and retail sectors.
In economics, supply is the amount of a resource that firms, producers, labourers, providers of financial assets, or other economic agents are willing and able to provide to the marketplace or to an individual. Supply can be in produced goods, labour time, raw materials, or any other scarce or valuable object. Supply is often plotted graphically as a supply curve, with the price per unit on the vertical axis and quantity supplied as a function of price on the horizontal axis. This reversal of the usual position of the dependent variable and the independent variable is an unfortunate but standard convention.
The supply curve can be either for an individual seller or for the market as a whole, adding up the quantity supplied by all sellers. The quantity supplied is for a particular time period (e.g., the tons of steel a firm would supply in a year), but the units and time are often omitted in theoretical presentations.
In the goods market, supply is the amount of a product per unit of time that producers are willing to sell at various given prices when all other factors are held constant. In the labor market, the supply of labor is the amount of time per week, month, or year that individuals are willing to spend working, as a function of the wage rate.
In financial markets, the money supply is the amount of highly liquid assets available in the money market, which is either determined or influenced by a country's monetary authority. This can vary based on which type of money supply one is discussing. M1 for example is commonly used to refer to narrow money, coins, cash, and other money equivalents that can be converted to currency nearly instantly. M2 by contrast includes all of M1 but also includes short-term deposits and certain types of market funds.