Supply – Meaning, Schedules, Curves, Laws - SS1 Economics Lesson Note

Supply is the amount of a good or service that producers are willing and able to sell at different prices in a given market. It reflects the relationship between the price of a good and the quantity supplied by producers.

Supply schedules and curves:

Supply schedules are tables that show the quantity of a good or service that producers are willing to supply at different prices, holding all else constant. They provide a snapshot of the supply of a good or service in a particular market. Supply curves are graphical representations of supply schedules, which show the relationship between the price of a good and the quantity supplied by producers. They are upward-sloping, indicating that producers are willing to supply more of a good or service at higher prices.

Table 1: Supply Schedule for Orange Juice

Quantity supplied per week (Thousands)

100

500

90

450

80

400

70

350

60

300

50

250

40

200

30

150

20

100

10

50

If we plot all the price and quantity supplied points of the supply schedule on a graph on the assumption that demand can be plotted for all prices of orange juice, we can obtain the supply curve for orange juice per week. We measure price on the vertical axis and quantity supplied on the horizontal axis, such that:

Law of supply:

The law of supply, on the other hand, states that as the price of a good or service increases, the quantity supplied of that good or service will also increase, ceteris paribus. This is because as the price of a good or service increases, suppliers are encouraged to produce more of it to earn higher profits. Conversely, as the price of a good or service decreases, the quantity supplied of that good or service will decrease, ceteris paribus.