Supply is the quantity of a resource that firms, labourers, financial providers or other economic agents are willing and able to provide directly to the marketplace or to another agent in the market place.
Supply can be in time, raw materials, currency, or any other scarce of valuable object that can be supplied to another agent in the market place. Supply is often fairly abstract.
For instance, in the case of time, supply is not directly transferred from one agent to another, but one agent may provide some other resource in exchange for the first spending time creating something.
Elasticity of supply¶
In economics, elasticity of supply refers to the change in supply as a result of change in the goods price. The law of supply says that there is a direct relationship between price and quantity supplied.
When price of goods increases, the quantity of goods producers make will also increase. This is because the increase in price gives an incentive for producers to produce more in-order to make more profit.
Supply is elastic if there are large changes in supply for a small change in price. For example, supply of software is elastic because since it costs little to create and distribute copies of software.
If the supply changes little with a change in price, then the supply is considered inelastic. For instance, supply of land is generally inelastic.