Supply

From MarketsWiki
Jump to: navigation, search
FTSE Russell banner 2016.gif

Supply in economics refers to how much of a good or service is availble for purchase by consumers or investors. Along with demand, it is considered the key determinant of price. The supply curve is depicted as an upward slope since producers tend to supply more of something as it price rises to increase revenue.

The impact of supply on price is, unlike with demand, a factor of time because suppliers must react quickly to changes in demand or price.[1] Not supplying enough to meet demand will raise demand for the good or service, pushing up the price, whereas supplying more than demand can consume will tend to drive the price down. An economy is said to be in equilibrium when supply and demand balance each other out.

Right side

Supply-side economic theory holds that reducing the government's claim on individual and corporate revenue frees more of that money to be invested in wealth production - usually by reducing high marginal tax rates.[2] The theory was championed in the 1970s by U.S. economist Arthur B. Laffer,[3] whose "Laffer curve" demonstrated the relationship between higher non-inflationary economic growth and reduced marginal tax rates. His policies are strongly associated with U.S. President Ronald Reagan's economic policies of the 1980s.

References

  1. Economics Basics: Demand and Supply. Investopedia - Forbes Digital.
  2. Business Definition for supply-side economics. AllBusiness.com.
  3. Arthur B. Laffer. EconomyProfessor.com.