Supply
Allocation of Resources · 4 question types
Exam Frequency Analysis
Past paper frequency (2018 to 2024)
This topic accounts for approximately 18% of your exam marks.
Supply appears alongside demand on virtually every paper; cost changes, technology, and taxes/subsidies are the most tested supply shifters.
Supply is the quantity of a good or service that producers are willing and able to offer for sale at a given price over a given time period.
The mirror of the demand definition. Two parts are essential.
- Willing. The producer is prepared to sell at the price on offer.
- Able. The producer has the resources to actually produce the good (capital, raw materials, labour). A firm without the inputs is not part of supply.
Like demand, supply is always measured over a time period (per day, per month, per year) and at a specific price or across a range of prices.
A definition that says "everything the firm has in stock" or "the amount in the warehouse" loses both marks. Supply is the quantity offered for sale at a price, not inventory.
Defining supply (2-mark question)
What comes up: "Define supply" — a standalone 2-mark question on exam papers.
Write (two marks): (1) the willingness to sell a good or service at a given price, and (2) the ability to provide it (having the productive resources to do so).
Watch out: writing only one part ("producers are willing to sell") earns just 1 mark. The mark scheme treats willingness and ability as two separate mark points. An answer that only describes a quantity available in the market — without the willing-and-able components — scores no more than 1 mark.