4.3 Supply

4.3 a. The Supply Curve

Supply curve, in economics, graphic representation of the relationship between product price and quantity of product that a seller is willing and able to supply. ^[11]

Example: If the price of soybeans rises, farmers will have an incentive to plant more soybeans, and the total quantity of soybeans on the market will increase. ^[12]

^{Supply Curve [13]}

4.3 b. Market Supply vs Individual Supply

Individual supply is the supply of an individual producer at each price whereas market supply of the individual supply schedules of all producers in the industry. ^[14]

Example: Firm 1 supplies seven chocolate bars at $3 and eight chocolate bars at $5. From this we can deduce that the cost of producing the seventh chocolate bar for the firm is $3. Similarly, the marginal cost of producing the eighth chocolate bar for the firm is $5. Similarly, at $3, firm 1 produces 7 bars, and firm 2 produces 3 bars. Thus, the total supply at this price is 10 chocolate bars. At $5, firm 1 produces 8 bars, and firm 2 produces 5 bars. Thus, the total supply at this price is 13 chocolate bars. ^[15]

^{Market Supply vs Individual Supply [16]}

4.3 c. Shifts in the Supply Curve

A change in conditions like the number of sellers in the market, the state of technology, the level of production costs, the seller’s price expectations, and the prices of related products will cause a shift in the supply curve. A shifting of the curve to the left corresponds to a decrease in the quantity of product supplied, whereas a shift to the right reflects an increase. ^[11]

Example: If a drought causes water prices to spike, the curve will shift to the left. ^[12]

^{Shifts in the Supply Curve [17]}