Definition: Quantity supplied is an economic measurement of the amount of finished goods and services that supplies are willing to produce and sell in the market at a given price. This amount varies at different price levels, but typically the higher the price, the more likely producers are willing to provide goods and services to consumers.
What Does Quantity Supplied Mean?
What is the definition of quantity supplied? The quantity supplied is affected only by price. This means that the only factor that can cause suppliers to change the amount they produce of a particular good or service is a change in the price of this good or service. Suppliers are willing to supply more quantity at a higher price because they will realize a higher profit.
Therefore, the quantity supplied should not be confused with supply, which is the total of quantities supplied at different supply prices. Furthermore, the way that supply changes by changes in the price of goods and services is the price elasticity of supply, not the quantity supplied, which depends on a given price level, usually set by the government or by the market forces.
Let’s look at an example.
Jonathan owns a small grocery store. He sells fresh produce, meat, and bakery products. He also sells canned food and frozen meat. As the holiday season approaches, Jonathan has noticed that his competitors have raised the price of beef meat from $6.13 per pound to $6.62 per pound.
Jonathan thinks that by increasing the supply of beef meat, he will raise his profits. Before the rise in the price of beef meat, Jonathan was selling approximately 50 pounds of beef meat daily, thus earning a gross profit 50 x $ 6.13 = $306.5. Given that the cost of beef meat was $3.20 per pound, Jonathan’s net profit was $6.13 – $3.20 = $2.93 per pound.
Now that the price of beef meat has risen to $6.62, Jonathan will realize a net profit of $6.62 – $3.20 = $3.42 per pound. If he increases the quantity supplied of beef meat, he will increase his profits even more.
Define Quantity Supplied: QS is the amount of goods and services that companies are able and willing to produce and sell to consumers at a specific price.