Question

What is supply and how does it relate to microeconomics?

Answer 1

Supply cant take the form of commodities or services. It is basically the amount of goods and services which the economic agents are willing to produce and son at different market prices at a particular point of time. It is related to microeconomics because we study the behaviour of firms. They use factor of production such as capital labor land and entrepreneur to manufacture output which is then made available in the market to be purchased by the buyer.

Supply in conjugation with demand determine the market clearing price and establish equilibrium in the market. There are consumers in the market who demands goods and services and therefore supply becomes very important because it tells how much goods and services are the producers willing to sell. This is studied under microeconomics.