Factor Supply
Definition
Factor supply refers to the quantity of factors of production that producers are willing and able to sell at different prices.
Analogy
Imagine you have a lemonade stand, and you need lemons as one of your key ingredients. The number of lemons you're willing and able to sell depends on how much money people are willing to pay for them. If they offer higher prices, you'll be more motivated to bring more lemons from your backyard tree.
Related terms
Factor Market: A factor market is where factors of production (like labor, capital, land) are bought and sold by businesses.
Labor Supply: Labor supply specifically focuses on the quantity of labor that workers are willing and able to offer at different wage rates.
Elasticity of Supply: Elasticity of supply measures how responsive suppliers are in changing their quantity supplied when there's a change in price.
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