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Visualizing the relationship between price and production on a graph.
Imagine you run a custom sneaker shop. If customers offered you 50, would you work harder to make more shoes? This simple choice is the secret behind the shape of every market graph!
Before we draw, we need data. A Supply Schedule is a simple table that shows the relationship between the price of a good and the quantity a seller is willing to provide. Think of it as a 'What If' list for a business owner. For example, 'If the price is , I will produce units.' In economics, we assume that producers want to earn the most profit possible. Therefore, as the price of a product increases, the incentive to produce more of that product also increases. This data is the foundation for every supply graph you will ever see.
Let's look at a supply schedule for a lemonade stand.
1. At a price of $P = \$0.50Q = 5P = \, the owner supplies cups.
3. At a price of $P = \$1.50Q = 15$ cups.
Notice how the quantity goes up as the price increases!
Quick Check
If a baker sees the price of bread rise from 4, does the baker usually want to supply more or less bread?
Answer
The baker wants to supply more bread because the higher price offers a higher potential profit.
To turn our schedule into a graph, we use a standard coordinate plane. In economics, we have a specific rule for the axes: the **Price () always goes on the vertical Y-axis, and the Quantity ()** always goes on the horizontal X-axis. To plot a point, find the quantity on the bottom line first, then move up to the corresponding price. Each row in your supply schedule becomes a single dot on your graph. Once the dots are placed, we connect them to reveal the Supply Curve.
Let's graph the supply for a pizza shop:
1. Identify your points from the schedule: $(Q_1, P_1) = (20, \$10)(Q_2, P_2) = (40, \.
2. Move right to on the X-axis, then up to $\$1040\ on the Y-axis. Mark your second dot.
4. Draw a straight line through both dots starting from the bottom left toward the top right.
Quick Check
On which axis do we always place the Price ()?
Answer
The vertical Y-axis.
When you look at your finished graph, you'll notice the line goes 'up and out.' This is called an upward-sloping curve. This visual trend represents the Law of Supply, which states that there is a direct relationship between price and quantity supplied. Mathematically, if , then . This happens because higher prices cover the costs of extra production and reward the seller for their effort. If the curve sloped downward, it would mean sellers want to sell less when prices are high—which wouldn't make much sense for a business!
$(100, \$50)(200, \, and $(300, \$150)\ increase in price, how much does the quantity increase?
What is the primary reason the supply curve slopes upward?
If you are plotting a point where the price is $15 and the quantity is 100, where do you go on the graph?
A supply schedule and a supply curve show the exact same information, just in different formats.
Review Tomorrow
Tomorrow morning, try to sketch a supply graph from memory. Can you label the axes correctly and draw the line in the right direction?
Practice Activity
Create a 'Cookie Supply Schedule' for yourself. If your friend paid you 5.00 per cookie? Plot those two points on a piece of paper.