Law of Supply

Offering goods or services is defined as: the quantity of goods or services that people are willing to sell at various price levels in a given time period.

Note that the difference between the definition of supply and the definition of demand is only one word. If the request uses the word buy, then the offer uses the word sell. As in the request, Supply analysis also assumes a certain time period, and that the determining factors of supply other than the price of the good are considered unchanged or constant (Other things being equal).

The relationship between the quantity of goods offered (in short: the number of offers or quantity supplied) with the price of goods g is a unidirectional relationship. If the price of goods is high, then more people will see the potential for making a profit by selling the goods they produce or own, so the number of offers for these goods is high. Conversely when the price goes down, then the number of offers will decrease. Fewer people can benefit from low prices, while those who do not benefit from low prices will delay selling, As a result, the number of offers in the market decreases.

The relationship between the quantity offered for goods or services and the price of the goods or services itself is stated in the Law of Supply, what it sounds like: the higher the price of an item, the greater the quantity of goods offered; The lower the price of an item, the lower the quantity supplied of that item.

Factors Affecting Supply

1 . Cost and Technology

Cost and technology are two concepts that are very closely related to each other. What is meant by costs are the costs incurred to produce goods and services, includes labor costs) raw material costs, machine rental costs, and/or land, administration and general fee, as well as interest costs on capital loans, if it uses a conventional economic system in its operations. In accounting principles, So what is meant by costs are all items listed in the profit and loss balance sheet.

Technology is the discovery and improvement of technology that is applied to reduce production costs. An example is production automation, the use of robots and computers, use of new computer software, etc. If new technology is implemented, the production costs for each unit of goods will be lower, then the application of this technology will increase supply. Likewise, if a management system is implemented that is able to increase production efficiency, then supply will increase, or the supply curve will shift to the right. That means, with a certain price level prevailing in the market, there will be a greater number of goods offered because of lower costs in producing them.

2. Number of Sellers

Clear, the number of sellers has a direct impact on supply. The more sellers are able to sell at a certain price level, maldn high offer.

3. Conjectures about the Future

The aspect of conjecture or expectation about the future includes guesses regarding changes in the price of the item. For example, if the seller suspects that the price of his goods will increase in the future, he will reduce his offer at this point. As a result, supply is reduced. This was prohibited by the Prophet SAW because this behavior caused prices in the market to soar

4. Natural conditions

such as a flood disaster, earthquakes and so on cause the supply of certain goods to decrease. especially agricultural goods

Read Also :

• Difference between Islamic and Conventional Economic Systems
• The Right to Receive Zakat
• Characteristics of Islamic Economics
• Basic Principles of Islamic Economics
• Understanding Islamic Economics
• Doa Nurbuat

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