Supply

Supply refers to the quantity of a good or service that producers are willing and able to sell at a given price over a specific time period. In OCR A-Level Economics, understanding supply is fundamental to analysing how markets function, as it interacts with demand to determine equilibrium prices and quantities. The law of supply states that, ceteris paribus, as price increases, the quantity supplied increases, reflecting the profit motive of firms.

The topic of supply extends beyond the basic law to include concepts such as supply curves, movements along and shifts of the supply curve, and the distinction between individual and market supply. Students must grasp the factors that cause the supply curve to shift, including changes in costs of production, technology, taxes, subsidies, and external shocks. These factors are crucial for evaluating real-world events like rising oil prices or government interventions.

Supply is not just a theoretical concept; it is essential for analysing market outcomes, price volatility, and the impact of government policies. For example, understanding supply elasticity helps predict how changes in price affect quantity supplied, which is vital for agricultural markets or housing. Mastery of supply enables students to tackle higher-level topics such as market failure, government intervention, and the dynamics of competitive markets.