What Is 'Fixed Supply'?


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Robin Burden answered
Fixed supply simply means that supply doesn't change - it is constant.

In economic terms, the word supply is often used as part of the phrase 'supply and demand'.

What is 'supply and demand'? And what does 'fixed supply' mean?
Supply and demand is an important economic model that determines market price based on the demand for a certain product or service - and the supply of that product available.

When a product is described as having a fixed supply, this often means that demand will be the only fluctuating factor affecting that product's market.

  • When supply is fixed, an increase in demand leads to a higher equilibrium price, and higher quantity.
  • On the other hand, if demand decreases, then this causes a lower equilibrium price, and lower quantity.
What implications does 'fixed supply' have?
When supply is fixed, there are several things that this could mean to the market for a certain product.

Often, a fixed supply means that a product will retain a fixed cost.

For example, if the supply of office furniture to a store remains fixed at a certain rate, then the cost that the store pays for the product shouldn't change either.

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