MARKET SUPPLY

What is "market supply"?

It is the total quantity of a good or service that all
producers are willing and able to supply at
different prices during a defined period of time.

It is also the summation of the individual supply

curves within a specific market.
THE LAW OF SUPPLY
It states a direct relationship between the price of a
product and its supply, while other factors are kept
constant.

FOR example:
If the price of a product increases, sellers
would prefer to increase the production of
the product to earn high profits, which would
automatically lead to increase in supply.

Similarly, if the price of the product decreases,

the supplier would decrease the supply of the
product in market as he/she would wait for
rise in the price of the product in future.
 supply curve
A graphical representation of the supplier’s
positive correlation between the price and
quantity of a good or service. As the price of a
good or service increases, the quantity that
the suppliers are willing to produce increases.

An upward sloping curve, which is also the

standard depiction of the supply curve
Picture From: investopedia
 market supply curve
It is derived by summing the quantity suppliers
are willing to produce when the product can be
sold for a given price. As a result, it depicts the
price to quantity combinations available to
consumers of the good or service.

In combination with market demand, the market

supply curve is requisite for determining the
Picture From: investopedia market equilibrium price and quantity.
example
A firm supplies seven chocolate bars
at $3 and eight chocolate bars at $5.

Figure 1: Supply curve of an individual firm

example

At $3, firm 1 produces 7 bars, and firm 2

produces 3 bars. Thus the total supply at
this price is 10 chocolate bars. At $5,
firm 1 produces 8 bars, and firm 2
produces 5 bars. Thus the total supply at
this price is 13 chocolate bars.

Figure 1.2: Market supply

 SUPPLY SCHEDULE
Supply schedule shows a tabular
representation of law of supply. It presents the
different quantities of a product that a seller is
willing to sell at different price levels of that
product.
 A supply schedule can be of two
types, which are as follows:

INDIVIDUAL SUPPLY SCHEDULE

Refers to a supply schedule that represents the different
quantities of a product supplied by an individual seller at
different prices.

mARKET SUPPLY SCHEDULE

Refers to a supply schedule that represents the different
quantities of a product that all the suppliers in the market are
willing to supply at different prices. Market supply schedule can
be drawn by aggregating the individual supply schedules of all
individual suppliers in the market.
Example for:

Individual supply schedule

PRICE OF MILK (PER LITER) QUANTITY SUPPLIED

$10 10

$12 13

$14 20

$16 25
Example for:

MARKET supply schedule

PRICE OF PRODUCT X INDIVIDUAL SUPPLY MARKET SUPPLY

(PER UNIT) (PER DAY) (PER DAY)

A B C

$100 750 500 450 1700

$200 800 650 500 1950

$300 900 750 650 2300

$400 1000 900 700 2600

SUPPLY FUNCTION
FORMULA:

Qs = c + dP
example Given: Qs = 0 + 10P
P qs

5 ?

4 ?

3 ?

2 ?

1 ?
example Given: Qs = 0 + 10P
Qs = c + dP Qs = ? P=5
P qs

5 ?

4 ?

3 ?

2 ?

1 ?
example Given: Qs = 0 + 10P
Qs = c + dP Qs = ? P=5
P qs
SOlution:
5 ?

4 ? Qs = 0 + 10P
3 ?
= 0 + 10(5)
= 0 + 50
2 ?

1 ?
example Given: Qs = 0 + 10P
Qs = c + dP Qs = ? P=5
P qs
SOlution:
5 50

4 ? Qs = 0 + 10P
3 ?
= 0 + 10(5)
= 0 + 50
2 ?
Qs = 50
1 ?
example Given: Qs = 0 + 10P
Qs = c + dP Qs = ? P=4
P qs

5 50

4 ?

3 ?

2 ?

1 ?
example Given: Qs = 0 + 10P
Qs = c + dP Qs = ? P=4
P qs
SOlution:
5 50

4 40 Qs = 0 + 10P
3 30
= 0 + 10(4)
= 0 + 40
2 20
Qs = 40
1 10
example Given: Qs = 15 + 10P
Qs = c + dP Qs = ? P=5
P qs

5 ?

4 ?

3 ?

2 ?

1 ?
example Given: Qs = 15 + 10P
Qs = c + dP Qs = ? P=5
P qs
SOlution:
5 65

4 55 Qs = 15 + 10P
3 ?
= 15 + 10(5)
= 15 + 50
2 ?
Qs = 65
1 ?
example Given: Qs = 15 + 10P
Qs = c + dP Qs = ? P=3
P qs

5 65

4 55

3 ?

2 ?

1 ?
example Given: Qs = 15 + 10P
Qs = c + dP Qs = ? P=3
P qs
SOlution:
5 65

4 55 Qs = 15 + 10P
3 45
= 15 + 10(3)
= 15 + 30
2 35
Qs = 45
1 25
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 50 P=?
P qs
SOlution:
? 50
Qs = 0 + 10P
? 40

? 30

? 20

? 10
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 50 P=?
P qs
SOlution:
? 50
Qs = 0 + 10P
? 40
50 = 0 + 10P
? 30

? 20

? 10
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 50 P=?
P qs
SOlution:
? 50
Qs = 0 + 10P
? 40
50 = 0 + 10P
? 30 -10P = 0 - 50
? 20

? 10
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 50 P=?
P qs
SOlution:
? 50
Qs = 0 + 10P
? 40
50 = 0 + 10P
? 30 -10P = 0 - 50
? 20 -10 -10
? 10
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 50 P=?
P qs
SOlution:
5 50
Qs = 0 + 10P
? 40
50 = 0 + 10P
? 30 -10P = 0 - 50
? 20 -10 -10
? 10 P=5
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 40 P=?
P qs

5 50

? 40

? 30

? 20

? 10
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 40 P=?
P qs
SOlution:
5 50
Qs = 0 + 10P
? 40
40 = 0 + 10P
? 30

? 20

? 10
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 40 P=?
P qs
SOlution:
5 50
Qs = 0 + 10P
? 40
40 = 0 + 10P
? 30 -10P = 0 - 40
? 20

? 10
example Given: Qs = 0 + 10P
Qs = c + dP Qs = 40 P=?
P qs
SOlution:
5 50
Qs = 0 + 10P
4 40
40 = 0 + 10P
3 30 -10P = 0 - 40
4 20 -10 -10
1 10 P=4
 THANK YOU!
SOURCES:
https://www.tutor2u.net/economics/topics/market-supply
https://courses.lumenlearning.com/boundless-
economics/chapter/supply/
https://www.investopedia.com/articles/economics/11/intro-supply-
demand.asp
https://saylordotorg.github.io/text_economics-theory-through-
applications/s12-01-market-supply-and-market-deman.html
https://www.economicsdiscussion.net/law-of-supply/law-of-supply-
schedule-curve-function-assumptions-and-exception/3367
https://youtu.be/ctwb65TBJGw