Afixed price agreementprovides the buyer withcost predictability. Once the price is agreed upon, the buyer is insulated from any cost increases on the supplier's side. The supplier bears the risk of fluctuating input prices, which simplifies cost control and contract administration for the buyer.
"With a fixed price arrangement, the buyer is protected from future price increases and does not need to monitor the supplier's ongoing costs. This is particularly useful for budgeting and forecasting." (L4M5 Commercial Negotiation, 2nd edition, Section 2.1 - Fixed Price Agreements)

A supply curve will slope upward from left to right showing more supply at higher prices, as illustrated in the graph below:
A movement along the supply curve will be brought about by a change in price, but a shift of the whole curve will be caused by a determinant other than price:
- The physical feasibility and time and energy required to produce the products
- Technology and innovation
- The objectives of the producers and their future expectations
- Prices of other goods and services
- Government's policies
LO 2, AC 2.2