Every educated person should understand what supply and demand in the market are and how these concepts affect the price level. As you know, manufacturers can not provide an unlimited number of goods and services, as potential buyers are not able to consume the entire volume. In order to streamline the market system, an indicator such as supply is used. It represents the volume of all products delivered to the market in a unit of time or for a certain period.
Understanding what such an offer is, it is worth considering that it reflects not only the actual presence of goods on the market, but also the volume of products that the supplier can deliver at the first request of the client. The current economic and political situation in the country allows entrepreneurs to decide independently for whom and in what quantity to produce. The manufacturer, in turn, determines the marginal volume of production, based on analytical data. Experts draw the appropriate conclusions based on an objective law that reflects the dependence of supply and price. Indeed, there is a connection between these indicators, because any increase in the value of the goods leads to an increase in
retained earnings, which gives reason to expand the business.
In order to understand what supply and demand are, one also needs to understand the interaction of these concepts. With an increase in demand for goods, that is, when buyers are ready to buy more products, manufacturers begin to increase the volume of supplies. If we represent these concepts in the form of a graph in one plane, then we get two intersecting lines. At the intersection point, an equilibrium price is established, that is, a state is reached in which such an amount of goods is delivered that the target audience can consume. Thus, demand creates supply and vice versa.
Among the factors influencing the offer, I especially want to highlight non-price. These include the cost of raw materials for production, the degree of tax burden, inflation expectations. For example, with an increase in the cost of raw materials and constant prices for manufactured goods, the head of the enterprise has to reduce the volume of finished products. Accordingly, on the chart, the supply curve moves to the left. The reverse dynamics is observed when the cost of raw materials decreases: output increases, and the curve shifts to the right.
Often, government agencies regulate market supply with a tax system. If the government decides to support the development of an industry, the tax rate for such enterprises is reduced. Then the entrepreneur has more of his own funds, which allows him to increase the volume of output. As an equally effective leverage, various subsidies and subsidies specially designed to develop or expand the activities of individual organizations can be noted.
Considering the question of what the proposal is, it is necessary to study this concept in conjunction with other factors.