supply curve

Also found in: Dictionary, Encyclopedia.
Related to supply curve: Supply Schedule

supply curve

Supply curveclick for a larger image
Fig. 178 Supply curve.

supply curve

a line showing the relationship between the PRICE of a PRODUCT or FACTOR OF PRODUCTION and the quantity supplied per time period. ‘Supply’ means the total quantity of a product or factor that firms or factor owners are prepared to sell at a given price.

The typical market supply curve for a product slopes upwards from left to right, indicating that as price rises more is supplied (that is, a movement along the existing supply curve). Thus, if price rises from OP1, to OP2 in Fig. 178, the quantity supplied will increase from OQ1, to OQ2 .

Fig. 178 shows the supply curve for the market as a whole. This curve is derived by aggregating the individual supply curves of all the producers of the good, which in turn are derived from the producers’ cost curves.

Most supply curves slope upwards because, as the price of the product rises, producers will find it more profitable to manufacture, using their existing production facilities, and because any increase in short-run MARGINAL COSTS associated with increasing output will be covered by the higher price obtained.

The slope of the supply curve reflects the degree of responsiveness of quantity supplied to changes in the product's price. For example, if a large rise in price results in only a small increase in quantity supplied (as would be the case where the supply curve has a steep slope), then supply is said to be price-inelastic (see PRICE-ELASTICITY OF SUPPLY).

The supply curve interacts with the DEMAND CURVE to determine the EQUILIBRIUM MARKET PRICE. See SUPPLY CURVE, (SHIFT IN), SUPPLY FUNCTION.

Supply curve (shift in)click for a larger image
Fig. 179 Supply curve (shift in). A fall in production costs shifts the supply curve S1 S1 to S2 S2, increasing the quantity supplied at price OP from OQ1 to OQ2. The magnitude of this shift depends on the sensitivity of product supply to changes in costs.

supply curve (shift in)

a movement of the SUPPLY CURVE from one position to another (either left or right) as a result of some economic change, other than PRICE. A given supply curve is always drawn on the CETERIS PARIBUS assumption that all the other factors affecting supply (costs in particular) are held constant. If any of these change, however, then this will bring about a shift in the supply curve. For example, if costs of production fall, the supply curve will shift to the right (see Fig. 179) so that more is now supplied at each price than formerly. See also SUPPLY FUNCTION.
References in periodicals archive ?
The whole supply curve has shifted outward and the new price is justified by the new supply conditions.
As part of the video, Solman and his guests debate the shape of the Oprah Supply Curve.
On top of the estimated price, our pricing framework provides us with a pair of demand and supply curves.
In economic terms, this view saw natural-resource supply curves as vertical--with the amount supplied incapable of expanding due to the incentive of higher prices.
10) Equally crucial is that the demand for present goods on the time market is not simply the supply curves for particular factors transposed on the time market, but rather the intersection of the supply curve with its DMVP schedule at each hypothetical rate of interest.
We call this our Network-Based Best Alternative (NBBA) technique, which is especially relevant in aggregates markets because they are capital intensive, have high transportation costs, steep supply curves, and frequently include multiple plants that serve different regions.
The decision to work longer hours reflects a movement along the supply curve.
A supply curve that is inelastic also cuts both ways--small increases in demand can result in large increases in price, but small decreases in demand can also result in large decreases in price.
Therefore, in order to measure changes in consumers and producers surplus associated with the shift of supply curve of sugarbeen because of importing sugar, at first it is necessary to define explicit mathematical functions representing supply and demand equations.
The main weak point in all the EoACAynationalisation labour' programmes in all the GCC is related to the supply curve, which is almost horizontal," commented Bu Hulaiga.
In large sections on single market analysis (partial equilibrium), general equilibrium analysis, and macroeconomics, they cover basic tools of demand and supply curve analysis; welfare economics; special markets and topics; basic tools of general equilibrium analysis; open economies; macroeconomic analysis and stabilization; and growth, income distribution, and other topics.
It is built upon the foundation of opportunity cost and is crucial to the construction of the total cost curve, the firm supply curve, the notion of economic profits, and the firm's shutdown condition.