Supply

Abstract

This entry analyzes the definitions and factors that influence the concept of supply in both mainstream economics and Islamic economics literature. Supply, as defined in mainstream economics literature, refers to the quantity of commodities or services that are available for sale in the market at a specific time and price. The elements that influence supply are price, prices of related and replacement goods, prices of production inputs, technology, taxes, subsidies, future expectations, and the number of sellers in the market. In his early works, the notions of supply and production are employed synonymously and occasionally used interchangeably. In recent years, the literature has introduced definitions for supply that closely align with conventional theory. The primary commonality between the two literatures is that there is a positive correlation between supply and price. As the price increases, manufacturers’ inclination to produce and sell a greater quantity of goods or services also increases. The primary areas of divergence are on factors such as moral standards and social benefit, which serve as determining factors for territorial matters.