Supply Side Theory Supply side theory is an approach to economics based on the idea that the best way to make the economy grow is to encourage businesses to supply more goods and services for purchase. Supply and demand are the basic forces that shape all economic activity. Supply is the quantity of goods and services that businesses are willing and able to produce at any given time over a range of prices, and demand is the quantity of goods andservices that consumers are willing and able to buy at any given time over a range of prices. These forces work in opposition to one another, and prices dictate the level of each of them. For example, if the price of digital cameras is high, then camera companies tend to produce as many digital cameras as possible. Conversely, consumers tend to buy fewer and fewer digital cameras as prices rise. Prices will therefore rise and fall to accommodate the competing desires of both the buyers and the sellers of digital cameras.