Introduction to Supply
- Supply is the amount of a good/service that a producer is willing & able to supply at a given price in a given time period
- A supply curve is a graphical representation of the price and quantity supplied by producers
- If data were plotted, it would be an actual curve. Economists, however, use straight lines so as to make analysis easier
- If data were plotted, it would be an actual curve. Economists, however, use straight lines so as to make analysis easier
- The supply curve is sloping upward as there is a positive relationship between the price and quantity supplied
- Rational profit maximising producers would want to supply more as prices increase in order to maximise their profits
- Rational profit maximising producers would want to supply more as prices increase in order to maximise their profits
Individual & Market Supply
- Market supply is the combination of all the individual supply for a good/service
- It is calculated by adding up the individual supply at each price level
- It is calculated by adding up the individual supply at each price level
The Monthly Market Supply Of Bread From 4 Bakeries In A Small Town
Bakery 1 |
Bakery 2 |
Bakery 3 | Bakery 4 | Market Supply |
300 |
600 | 180 | 320 | 1400 loaves |
- Individual & market supply can also be represented graphically
Market supply for smart phones in December is predominantly the combination of iPhone & Samsung supply
Diagram Analysis
- In New York City, the market supply for smart phones in December is predominantly the combination of iPhone & Samsung supply
- At a price of $1000, the supply of iPhones is 300 units & the supply of Samsung phones is 320 units
- At a price of $1,000, the market supply of smart phones in New York City during December is 620 units