What is the #Supply (供给) Curve?

8 Jun

What is the #Supply Curve in #Economics?
Supply is the number of products currently available for sale.

In #Microeconomics, we often look at the supply of one company (how many that company has ready for trade).

In #Macroeconomics, we sometimes talk about Aggregate Supply (how many are up for sale in the entire market).

Below is a simple explanation of the Supply Graph and what you need to know!

Let’s say that Mike is buying pencils from Metro (Màidélóng)

We want to know what price should Mike offer?

Suipply Curve.jpg

This picture is very helpful! The light Green Line (supply ) tells us how many pencils Metro will have available for sale at each price.

Situation #1: The price is $3.00, Metro will have 30 pencils available for sale.

Situation #2: The price is $1.00, Metro will have 10 pencils available for sale.

Situation #3: The price is $4.00 and Mike wants 25 pencils. Can Mike buy those 25 from Metro?

Answer: Yes! Mike wants 25 pencils and Metro has 40 pencils. So Mike can buy 25 pencils at Metro for $4.

Situation #4: The price is $4.00 and Mike wants 50 pencils. Can Mike buy 50 pencils from Metro?

Answer: No! Mike wants 50 pencils, but Metro only has 40. So Mike can get 25 pencils or even 40 pencils. But he cannot buy 50 pencils for $4.00 because the store will not have enough.

So we could draw the picture like this:

Supply 2

So what is the Supply Curve?

  • It tells us the MAXIMUM (最大) number of products Metro will have available for sale at each price.
  • It tells us how many products Mike CANNOT buy.
  • It gives us an idea of what price we should choose. For example, if the price is $8.00, Mike can buy 80 pencils! But if the price is $1, he can only buy 5 pencils.

Law of Supply (供给法则) ~ When price increases (), more products will be available for sale.

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