Framboð

Framboð is the term used in Icelandic economics for the supply of a good or service—the quantity that producers are willing and able to offer for sale at various prices during a specific time period.

All else equal, higher prices provide an incentive to produce and sell more, so the quantity supplied tends to rise as price rises and fall as price falls. This relationship is depicted by the supply curve, which is usually upward sloping in the short run.

Several factors other than price affect framboð. Production costs and input prices; technology and productivity; the prices of other goods that could be produced with the same resources; expectations about future prices; the number of sellers; and government policies such as taxes, subsidies, or regulations, as well as natural conditions and shocks.

A change in price causes movement along the supply curve, while a non-price determinant shifts the curve itself, increasing or decreasing supply at every price.

Supply interacts with demand to determine the market equilibrium—the price and quantity at which producers are willing to sell and consumers are willing to buy. An increase in framboð, ceteris paribus, tends to lower the equilibrium price and raise the equilibrium quantity; a decrease tends to raise the price and reduce quantity.

In the short run, some inputs are fixed, so supply may be less elastic; in the long run, all inputs are variable and firms can enter or exit the market, making supply more elastic.

Examples include agricultural products affected by weather, or industries subject to technology change or policy shifts.