One important and fundamental concept in economics is that of supply and demand. Supply and demand drive the prices for virtually all products and services in a free market. Within the concept of supply, it is important to distinguish between supply and quantity supplied. The former is the broad concept, while the latter is a more narrow concept.
The supply curve is a graphical representation of the way supply changes with price. The axes of the graph on which the supply curve are charted are quantity on the horizontal axis and price on the vertical axis. For normal products and services, as price increases, supply also increases, because more companies will enter the market and create more of the product or service.
Supply refers to the entire relationship between price and quantity at each price. When supply increases, the entire supply curve will shift to the right. Increases in supply could be caused by a new company entering the market, a reduction in the cost of inputs such as raw materials or labor or various other factors.
Quantity supplied refers to a specific point along the supply curve. In other words, quantity supplied is the amount of a product or service supplied given a specific price. Graphically, this is represented by the horizontal distance from the horizontal axis to the supply curve. An increase in the quantity supplied is caused by an increase in the price of the product or service.
Primary Differences Between Supply and Quantity Supplied
One of the most important differences between supply and quantity supplied is that supply represents every possible price and quantity relationship along the supply curve, while quantity supplied is just a point along that curve. Another important difference is that an increase in supply shifts the entire supply curve, while an increase in quantity supplied simply represents a movement of a point along that curve.