An Introduction to Supply
- Supply is the number of goods/services businesses are willing to sell at a given price in a specific time period
- There is a direct relationship between supply and price
- As the price increases, the quantity supplied increases
- As the price decreases, the quantity supplied decreases
- At higher prices, businesses are incentivised to supply more of the product
- Hence the supply curve slopes upwards from left to right
A supply curve showing how a change in price will lead to a change in the quantity supplied (QS)
Diagram Analysis
- An increase in price from £7 to £9 leads to a move up the supply curve from point A to B
- Due to the increase in price, the quantity supplied (QS) has increased from 10 to 14 units
- Due to the increase in price, the quantity supplied (QS) has increased from 10 to 14 units
- A decrease in price from £10 to £7 leads to a movement down the supply curve from point A to point C
- Due to the decrease in price, the quantity supplied (QS) has decreased from 10 to 7 units
Exam Tip
When writing about a movement along the supply curve we use the term quantity supplied.