Supply Curve

The law of supply states that, as the price of a commodity rises, so does the quantity supplied, ceteris paribus. As the price falls, the quantity supplied also falls, ceteris paribus.

Figure 3.2

Above is a supply curve; it shows the relationship between price and quantity supplied, ceteris paribus.

The supply curve is a graphical representation of the law of supply, and shows that, when the price of a commodity is low at P1, the quantity supplied will also be low at Q1. As the price of the commodity increases to P3, the quantity supplied also increases to Q3.

Note:   

1. Because the quantity supplied increases as price increases, the supply curve has a positive slope.

2. The change in price results in a movement along the supply curve.

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