Supply+Curve-+Generally

SUPPLY CURVE

Supply curves show the amount producers are willing and able to produce at given prices, other things equal. These other things equal are the determinants of supply: resource prices, technology, taxes and subsidies, prices of other goods, price expectations, and the number of sellers in the market. If these things change, the entire supply curve shifts. If only the price of the good changes, it is said that the "quantity supplied" changes, shown by movement //along// the supply curve, not movement //of// the supply curve.

The supply curve visually shows the direct relationship between price of a good and quantity supplied. That is, as price increases, so does quantity supplied, and vice versa. This concept is known as the Law of Supply. This relationship is shown by the upward slope (to the right) of the supply curve, created when the supply schedule, with price as the independent variable and quantity supplied as the dependent variable, is graphed. This may be counterintuitive to some people since the independent variable (price) is actually graphed on the axis usually known as the y-axis or the vertical side of the graph and the dependent variable (quantity supplied) is graphed on what is usually the x-axis or the horizontal side of the graph.

Price vs. Quantity Supplied

This graph shows a basic supply curve; as the price increasees, so does the quantity supplied.

How to Graph a Supply Curve:

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Practice Question: //Answer at bottom of page.// __Fill in blanks__. On a supply curve price and quantity supplied have a ______ relationship. That is, as price increases, quantity supplied ______. a. Direct, decreases b. Direct, increases c. Indirect, decreases d. Indirect, increases

For more information on the supply curve: [|Basic Description of Supply Curve]-This site gives a basic description of how to graph a supply curve and what the curve means. [|Wikipedia on Supply and Demand]-Wikipedia gives a thorough description of the supply curve (and the demand curve) and the determinants of supply. [|Definition of Supply Curve]-This site defines the supply curve in the simplest terms.

Answer to practice question: B Price and quantity supplied have a direct relationship, which means that as one increases, so does the other, and vice versa.