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How to calculate the supply function for the economy

The supply function in economics is used to indicate the amount of certain products that need to be offered at the price of a given commodity. It is used in combination with what is known as the demand function to determine the balanced price for different markets.

How to Calculate a Supply Function for Economics
How to Calculate a Supply Function for Economics

Step 1

Determine the price of the goods related to the product with the supply function that you are calculating.

Step 2

Find out how many suppliers or manufacturers of goods have given.

Step 3

Specify the function based on how the given quantity will affect the delivery of a product. This will be different for any given product. However, it has always been assumed that the price of the products involved and the number of suppliers will remain unchanged. For example, take an imaginary economy in which the number of goods offered is the price, minus 1/5 of the price of the goods involved, plus the number of suppliers. In this case, the supply function will be “Qs = P – 1 / 5Prg-S.”

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