We explain what the offer is, its characteristics and how it relates to the demand. In addition, what are the elements that determine it.
What is offer?
The term offer comes from the Latin offerre, which means offer . This word has different meanings, one of them could be defined as the promise to fulfill or deliver something. It can also be understood as the reduction of a price . But where the concept acquires greater importance is in Economy , where it is understood as one of the engines of the market.
The offer can be defined as the quantity of goods and / or services that different organizations , companies or people have the capacity and desire to sell in the market, in a certain period of time and space, in a particular monetary value, in order to satisfy desires and / or needs.
The law of supply is understood as the variation of the disposition of goods and services in a market , whose changes are closely linked to the change in prices. If prices are high, the offer increases, on the contrary, if prices go down, the offer will do the same.
Elements of the offer
Some key elements of the offer are the following:
- Provision of sale. In this case we talk about the wishes of the seller or producer to offer their merchandise or service. These wishes are usually determined by the prices of the offer, as explained in the offer law. If prices are high sellers want to offer their good or service. Otherwise you often choose to keep it.
- Sellers When talking about sellers, reference is made to physical subjects or to any type of organization or company that has the capacity to offer the goods and / or services .
- Quantity. In this case, reference is made to the precise number of each product or service that sellers wish to offer in the market.
- Sales capacity This element does not depend on the will of the sellers but rather on what they have the possibility to produce or offer in a certain period of time and at a certain price.
- Wishes and needs. When talking about buyers’ wishes, they don’t talk about specific needs, but rather about desires. For example I want a jacket or jacket of a certain brand. On the other hand, the needs are certain basic requirements of the people from whom they have been deprived, for example the need for shelter.
- Market. This is the place where goods and / or services can be exchanged for money. This space can be physical or virtual, for example through the Internet .
- Lapse of time. In this case, reference is made to the cycle in which goods and / or services can be found in the market. They can be weeks, months, years.
- Price. When talking about prices, reference is made to the pecuniary value expressed in a given currency that the products and / or services possess.
Offer and demand
Supply and demand are two terms that are closely linked . When talking about demand , reference is made to the quantity of goods and / or services that people wish to acquire. The offer is another of the engines of the market.
When these two market forces come together, they are the determinants of the quantity of goods and / or services that will be produced and at what price they will be sold . It is not necessary the presence of any other agent to set the prices in case there is talk of free supply and demand.
However often the governments decide to intervene in the formation of prices and availability of products or services. For this, various techniques can be used, such as the granting of subsidies so that prices are lower or production increases. Other times you try to reduce this consumption or production and for this you can increase the tax burdens.