Supply curve

Definition

A supply curve is a graphical representation showing the relationship between the price of a good or service and the quantity supplied over a given period. It typically slopes upward, indicating that higher prices incentivize producers to supply more.

5 Must Know Facts For Your Next Test

1. The law of supply states that, all else being equal, an increase in price results in an increase in quantity supplied.
2. Movements along the supply curve are caused by changes in the price of the good or service.
3. A shift in the supply curve occurs when there is a change in a non-price determinant, such as technology or input costs.
4. An outward (rightward) shift indicates an increase in supply, while an inward (leftward) shift indicates a decrease.
5. The slope of the supply curve can be influenced by factors like production capacity and availability of resources.

Review Questions

• What causes a movement along the supply curve?
• How does an outward shift in the supply curve affect quantity supplied?
• What are some factors that can cause the supply curve to shift?

Related terms

Demand Curve: A graphical representation showing the relationship between the price of a good or service and the quantity demanded over a given period.

Equilibrium Price: The market price where the quantity of goods supplied is equal to the quantity of goods demanded.

Price Elasticity of Supply: A measure of how much the quantity supplied of a good responds to changes in its price.