Aggregate Supply
Categories: Econ, Company Management
Aggregate supply represents the total amount of some product or service produced in a certain geographic area during a certain period of time. It's usually used as part of national economic calculations, or figures presented for particular industries, like oil production.
However, let's take a look at a more local example.
Your neighborhood McDonald's has a certain number of burgers on hand, meaning they can serve a certain number of patties in a day. Not knowing much about your local McDonald's, let's just say that amount is 1,000. Let's further say your local Burger King has a similar number of burgers on hand. So add another 1,000. Same with your Wendy's. Another 1,000.
The rest of your hometown fast food landscape is Taco Bells, Paneras, and that one Arby's you always forget is there. They don't have any hamburger patties at all, so they get left out of the equation. (Sorry, Arby's. Maybe next time we'll figure aggregate supply of curly fries.)
So in your local market, the aggregate supply of hamburgers is 3,000 per day, with McDonald's, Burger King, and Wendy's each supplying 1,000.