What Is a Supply Curve?

A supply curve is gr✨aphed with the price on the left vertical axis and the quantity suppli🔯ed on the horizontal axis. It is usually depicted as an upward-sloping line. As prices increase, sellers are more willing to make more goods and services available.

The supply and 澳洲幸运5官方开奖结果体彩网:demand curves are the key components oౠf the law of supply and demand. The intersection of the two curves represents market equiliℱbrium, the point at which supply and demand meet to demonstrate a balanced price and quantity.

How a Supply Curve Works

The supply curve moves upward from left to right, illustrating the 澳洲幸运5官方开奖结果体彩网:law of supply: As the price of a commodity increaseꦗs, the quantity supplied will increase. This implies that price is the independent variable, and quantity is ꦬthe dependent variable.

Example

On the graph below, S₁ represents the supply curve for the supply and pricing of soybeans. A new supply curve can be drawn if a factor besides price or quantity changes. Suppose more soybean farmers enter the market, clearing forests and increasing the land devoted to soybean cultivation. In this scenario, more soybeans will be produced and the supply will increase, even if the price remains constant. The supply curve shifts to the right (S₂).

Other factors can shift the supply curve, such as a change in the production cost. If a drought causes water prices to spike, the curve shifts to the left (S₃). If the price of a substitute crop such as corn increases, farmers will shift to growing that instead, and the supply of soybeans will decrease (S₃₎.

If a new technology, such as a pest-resistant seed, increases yields, the supply curve shifts right (S₂). If the 澳洲幸运5官方开奖结果体彩网:futures price of soybeans is higher than the current price, the supply will temporarily shift left (S₃), since producers have an incentive to wait to sell. Should the price of soybeans rise, farmers may plant more soybea💛ns, and🍌 the total quantity of soybeans on the market will increase. 

The degree to which rising prices translate into rising quantity is called 澳洲幸运5官方开奖结果体彩网:supply elasticity or price elasticity of supply. If a 50% ri🎃se in soybean prices causes the number of soybeans produced to increase by 50%, the supply elasticity of soybeans is 1. If a 50% rise in soybean prices only increases the quantity supplied by 10%, the s☂upply elasticity is 0.2.

Market Equilibrium

The 澳洲幸运5官方开奖结果体彩网:law of supply and demand states that the price of a product will reach an 澳洲幸运5官方开奖结果体彩网:equilibrium based on the𓆏 quantity provided by sell𝓰ers and the amount demanded by consumers.

The Bottom Line

The supply curve is depicted as a graph and part of the law of supply and demand. The lower the supply, the higher the price. The demand curve is the supply curve's counterpart: the higher the supply, the lower the price.