Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What best defines supply in an economic context?

1. The total quantity of goods available for sale

2. The amount consumers are willing to purchase

3. The level of production considering resources

4. The availability of substitutes

The correct answer is: The total quantity of goods available for sale

The concept of supply in economics is best defined as the total quantity of goods available for sale. This definition encompasses all the goods that producers are willing and able to sell at different price levels during a specified period. It reflects not only the physical quantity of products but also the conditions and reasons behind the availability of these goods, such as production capacity, resource allocation, and market demand dynamics. Other options fall short of capturing the full essence of supply. For instance, while the amount consumers are willing to purchase pertains to demand, the level of production considering resources relates more to production capacity rather than supply itself. The availability of substitutes addresses consumer choice and market dynamics but does not directly define the quantity of goods that are supplied in the market. Hence, the total quantity of goods available for sale best encapsulates the definition of supply.