Supply Schedule and Supply Curve

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 Learning Contents:                                                            

·            Individual Vs. Market Supply Schedule

·            Individual Vs. Market Supply Curve

·            Difference between Individual and Market Supply

Supply Schedule

A table that shows the relationship between quantity supplied and price of the commodity is called supply schedule. In other words, supply schedule is a table showing different quantities of a commodity that sellers are willing and able to sell at different possible prices during a particular period of time.

The supply schedule is generally based on the law of supply that states that other things remains constant; there exists a positive or direct relationship between the price and quantity supplied. The quantity supplied increases at higher price as it generates high revenue and profits for the sellers and vice versa. The supply schedule generally consists of two columns: one for the price of a commodity and other for the quantity supplied.  The supply schedule is classified into two types:

Supply Curve

Supply curve is the graphical representation of the supply schedule. It also shows the positive relationship between price and quantity supplied of the commodity. Supply curve is also classified in two types:


Individual Supply Schedule

A table that shows the different quantities of the commodity that one seller or firm is willing and able to sell at different possible prices of that commodity during a particular period of time.

                      Individual Supply Schedule of Firm ‘A’

Price of

Apples

      (Amount in ₹)

Quantity

Supplied

      (Units)

 

20

1

30

2

40

3

50

4

Explanation:

The above schedule depicts the individual supply schedule. We can see, when the price of the apples is ₹20, a seller sells 1 unit of apple.  Similarly, when price rises to ₹50, he sells 4 units of apple. It indicates that there is a positive relationship between quantity supplied and price of the apples.

Individual Supply Curve

Individual supply curve is the graphical representation of individual supply schedule. It shows the relationship between price and the quantity supplied by a single seller or firm. An individual supply curve shows an individual seller’s behavior that is willing to sell his commodities at different prices.  It slopes upward as it shows the direct relationship between quantity supplied and the price of the commodity.


 Explanation

The quantity supplied by a seller or firm is shown on X- axis and the price of the apples is shown on Y-axis. The upward sloping SS curve is an individual supply curve that shows the quantity supplied of apples at different prices. Individual supply curve slopes upward from left to right indicating the positive relationship between price and quantity supplied of the apples. We can see that, when the price of apples is ₹ 20 per unit, a seller sells its 1 unit and when the price goes to ₹50 per unit, he sells its 4 units.

Market Supply Schedule

It is table showing different quantities of a commodity that all sellers or firms are willing to sell at different possible prices during a particular period of time. It considers the sales by all the sellers in the market. We get the market supply of a commodity by doing the total of quantity supplied by all the sellers at different prices.

To understand this concept, we assume that there are three sellers ‘A’, ‘B’ and ‘C’ in the market. Their quantity supplied at different prices is given in the market supply schedule as below.

Market Supply Schedule of Sellers ‘A’, ‘B’, ‘C’

 

Price of

Apples

    (amount in ₹)

 

Quantity supplied

  ( units in kg)

 

Total Quantity supplied

of Apples by firms ‘A’, ‘B’ and ‘C’

(A+B+C)

A

   

 

B

    

 

C

    

 

20

1

2

3

6

30

2

3

4

9

40

3

4

5

12

50

4

5

6

15

Explanation:

The above schedule depicts the market supply schedule. It shows that when price of the apples is ₹ 20; market supply is 6 units of apples.  Similarly, when price rises to ₹50; market supply rises to 15 units of apples. It indicates that there is a positive relationship between quantity supplied and price of the apples.

Market Supply Curve

Market supply curve is the graphical representation of the market supply schedule. It shows the different seller’s behavior that are willing to sell their commodities at different prices. The quantity supplied by all the sellers or firms in the market is shown on X- axis and price of the apples is shown on Y-axis.




Explanation

The quantity supplied by all the sellers or firms ‘A’, ‘B’ and ‘C’ is collectively  shown on X- axis and price of the apples is shown on Y-axis. In Fig. 4, the SS curve is the market supply curve that shows the quantity supplied of apples at different prices. Market supply curve slopes upward from left to right indicating the positive relationship between price and quantity supplied of the apples. We can see that, when the price of apples is ₹20 per unit; market supply is 1+2+3 =6 units and when the price goes to ₹50 per unit; market supply goes to 4+5+6 = 15 units.

Difference between Individual supply and Market supply

S.No.

Individual Supply

Market Supply

1.

Individual supply is the supply of individual or single seller or firm.

Market supply is the supply of all the sellers or firms in the market.

2.

Law of supply may or may not hold true because an individual seller may or may not consider price, objective of the firm factor etc. while selling the commodities.

In this case, Law of supply holds true as the entire sellers would not ignore the price or other factors while selling the commodities.


Let’s try some questions

Choose the Correct Answer

1. ____________ is a table representing the quantity supplied by a single seller at different prices of a commodity.

a. Individual supply schedule

b. Market supply schedule

c. Both a. and b.

d. None of above

2. The graphic representation of a table showing price and supply relationship for a commodity in the market is called:

a. Individual supply curve

b. Producer’s demand curve

c. Market supply curve

d. Consumer’s demand curve

3. Graphical representation of supply curve of an individual firm in the market is called:

a. Individual supply curve

b. Producer’s demand curve

c. Market supply curve

d. Consumer’s demand curve

4. A supply curve differs from a supply schedule because a supply curve

 a. holds the number of suppliers constant, whereas the supply schedule allows the number to vary.

b. is a graph and the supply schedule is a table.

c. holds resource prices constant, whereas the supply schedule allows them to vary.

d. represents one firm, whereas the supply schedule represents all firms in the market.

5. A supply curve shows the relation between the quantity of a good supplied and

a. the price of the good. Usually a supply curve has negative slope.

b. income. Usually a supply curve has positive slope.

c. income. Usually a supply curve has negative slope.

d. the price of the good. Usually a supply curve has positive slope.

6. The market supply curve shows

a. the effect on market demand of a change in the supply of a good or service.

b. the quantity of a good that firms would offer for sale at different prices.

c. the quantity of a good that consumers would be willing to buy at different prices.

d. All of the above are correct

 

Answer Key

 

1.a

2.c

3.a

4.b

5.d

6.b

 

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Comment if you have any questions.


(Keep Learning and Keep improving)





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