Supply refers to the quantity of a product that producers, sellers or firms are both willing and able to offer in the market at a particular price over a period of time (Mabry & Ulbrich, 1989).

The Law of Supply

The law of Supply states that the quantity supplied of a good or commodity has a positive relationship with price; as the price of a commodity rises, producers will increase their supply of goods to the market, ceteris paribus (Blinder & Baulmol, 2000). Ceteris paribus is a Latin term that means everything is unchanged, equal or constant (Tancred Lidderdale, 2003).

A higher market price is necessary to entice a seller to sell more of a product, since the marginal opportunity cost of supplying the good increases as more of the good is produced.

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Illustration of supply

Supply can be illustrated using a supply schedule or a supply curve (Tancred Lidderdale, 2003). A supply schedule is a tabloid representation, while a supply curve is a graphical representation of supply. They show how the quantity supplied of a product changes over time as the price of the product changes (Blinder & Baulmol, 2000).

Table 1

Price of Good

Quantity of Good

$ 2

2

$ 6

5

$ 12

8

Table 1: A supply schedule showing the positive relationship between Price and Quantity supplied of a good.

Why does a supply Curve Slope Upwards?

Price Supply

Quantity

Supply curves are drawn from left to right because market price and quantity supplied share a positive relationship; when price increases, quantity supplied will increase simultaneously and in addition when price decreases, quantity supplied will increase simultaneously (Blinder & Baulmol, 2000).