Supply
Supply is the number or total number of goods a business is able to provide to the market at any price. In general, businesses are more willing to supply goods or products when the price is high or increasing and less willing to supply when the price decreases.
The above supply curve shows that supply decreases and is low when the price is low or decreasing but increases as the price increases.
There are factors other than price that affect the supply of goods:
Availability of raw materials and the supply of labour
Manufacturing goods requires raw materials from the earth or the oceans. Shortages of these raw materials will make it difficult and more expensive to buy these raw materials and as a result, their price will increase. Businesses can choose to switch their suppliers of raw materials or they may choose to use other raw materials. An alternative would be to increase the price of the finished goods. Similarly, a shortage of workers with the necessary skills can make it difficult to secure a suitable labour supply. In the agricultural sector, this can include a shortage of suitable manpower for picking vegetables and fruits during the harvest period.
Logistics
Logistics is about transporting goods from one place to another. If there are delays in the supply chain, this can affect the supply of those goods. In 2021, there was an accident on the Suez canal that resulted in the huge ship, Ever Given getting into difficulty in the middle of the canal. This resulted in the closure of the Suez Canal to ships for quite a long period of time. As a result, it was not possible for the large ships carrying goods between the Far East and Europe to move through the canal. This in turn led to the supply of some goods being stopped over a period of six days or more.
Ability to produce profitably
It is vitally important that suppliers are able to produce profitably in order to continue to trade. If supplying a particular commodity is not profitable then suppliers are likely to terminate that business or switch to supplying other goods. For example, if a farmer finds leek production unprofitable, the farmer will likely switch to producing other vegetables. This in turn will affect the supply of leeks available.
Competition for raw materials
Where raw materials are scarce, competition for the purchase of those raw materials will increase. This can lead to rising costs to produce those goods. With the production price rising, the selling price of the goods will increase. This is likely to result in a reduction in sales.
Government support
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