Supply, or the desired quantity supplied, refers to the amount that a firm would like to sell at any given price. We expect the relationship between the desired quantity supplied and price to be positive. That is, as price goes up firms are willing to supply more.

   At first, this may seem a bit odd. After all, as we look around we notice that large stores often have lower prices, and smaller shops have higher prices. However, such observations represent the interaction of supply and demand, as well as production costs and industry structure. Here, we are focusing on the desired quantity supplied, which is much simpler.

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