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Economic Theory

When economists talk about supply, they mean the amount of some
good or service a producer is willing to supply at each price. Price is what
the producer receives for selling one unit of a good or service. A rise in
price almost always leads to an increase in the quantity supplied of that

good or service, while a fall in price will decrease the quantity supplied.
In economic terminology, supply is not the same as quantity

supplied. When economists refer to supply, they mean the relationship
between a range of prices and the quantities supplied at those prices, a
relationship that can be illustrated with a supply curve or a supply
schedule. When economists refer to quantity supplied, they mean only a

certain point on the supply curve, or one quantity on the supply schedule.
In short, supply refers to the curve and quantity supplied refers to the
(specific) point on the curve.

The total amount of goods supplied at various prices by all
producers/sellers in a market is called market supply.
Supply schedule represents the relation between prices and the
quantities of good supplied. It is a list of quantity supplied by producers at

different prices. This is shown in a table in Figure 5.2. The supply
schedule provides a set of possible prices, and a specific quantity supplied
is listed for each of the possible prices in the schedule.

Figure 5.2 – Supply Schedule and Supply Curve

A frequent question is whether the supply of a good is a function of

price, or is price a function of supply? In graphing a supply schedule, once

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