What does Supply refer to in economics?

Supply in economics refers to the quantity of a commodity that producers are willing and able to offer for sale in the market at various prices. This definition captures the essence of supply as it specifically relates to the availability of goods or services that can be purchased by consumers.

When we talk about supply, we often consider how it changes with price: as the price of a commodity increases, producers are typically willing to supply more of it, assuming other conditions remain constant. This relationship forms the basis for the supply curve in microeconomics, which illustrates the quantity supplied at different price levels.

Understanding supply is crucial because it directly impacts how markets function. A higher supply at a certain price can lead to lower prices due to increased competition among sellers, while a lower supply might lead to higher prices as consumers compete for a limited amount of goods. This dynamic interplay of supply and price is fundamental in determining market equilibrium.

The other options do not accurately define supply. The total amount of currency in circulation relates to monetary policy, total demand refers to the overall desire of consumers to purchase goods, and the price at which goods are traded involves market transactions but does not inherently define supply itself.