Supply and Quantity Supplied, Law of supply, Market Supply Curve

Ø Supply and Quantity Supplied:

To set the stage for an understanding of this difference, take note of two related concepts:

• Quantity Supplied: Quantity supply is a specific quantity that sellers are willing and able to sell at a specific supply price. It is but ONE point on a supply curve.
• Supply: Supply is the range of quantities that sellers are willing and able to sell at a range of supply prices. It is ALL points that make up a supply curve.

• Change in Quantity Supplied: A change in quantity supplied is a change from one price-quantity pair on an existing supply curve to a new price-quantity pair on the SAME supply curve. In other words, this is a movement along the supply curve. A change in quantity supplied is caused by a change in price.

Change in Supply: A change in supply is a change in the ENTIRE supply relation. This means changing, moving, and shifting the entire supply curve. The entire set of prices and quantities is changing. In other words, this is a shift of the supply curve. A change in supply is caused by a change in the five supply determinants.

Ø Market Supply Curve:

Economists distinguish between the supply curve of an individual firm and between the market supply curve. The market supply curve is obtained by summing the quantities supplied by all suppliers at each potential price. Thus, in the graph of the supply curve, individual firms' supply curves are added horizontally to obtain the  market supply curve.

    Ø Supply curve: 

The supply curve is a graphical representation of the relationship between the price of a good or service and the quantity supplied for a given period of time. In a typical representation, the price will appear on the left vertical axis, the quantity supplied on the horizontal axis.

   

    Ø Law of supply :

The law of supply is a fundamental principle of economic theory which states that, all else equal, an increase in price results in an increase in quantity supplied.^[1] In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes. This means that producers are willing to offer more products for sale on the market at higher prices by increasing production as a way of increasing profits.^[2]

In short, Law of Supply is a positive relationship between quantity supplied and price and is the reason for the upward slope of the supply curve.