From Individual Supply To Market Supply

After you have worked through this section of the learning unit, you should be able to:

  • draw a market supply curve given individual supply schedules 

While we can learn a lot from individual supply schedules and curves, it is the market supply that we need to understand to grasp how the market price is determined. The market supply schedule can be obtained, as in the case of the market demand schedule, simply by the addition of the individual supply schedules.

To illustrate: It is assumed that there are only three suppliers of fried chicken pieces, namely Funky Chicken, King Chicken and Magic Fried Chicken.

Market supply schedule for fried chicken pieces

Quantity supplied by Funky Chicken Quantity supplied by King Chicken Quantity supplied by Magic Fried Chicken Market quantity supplied
7 14 16 18 48
6 12 14 16 42
5 10 12 14 36
4  8 10 12 30
3   6   8 10 24
2   4   6   8 18
1   2   4   6 12

At R7, the market quantity supplied is 14 by Funky Chicken, + 16 by King Chicken and +18 by Magic Fried Chicken, which gives us a total of 48 pieces. Following the same procedure for the rest of the prices, the market quantity supplied at R6 is 42, at R5 it is 36, at R4 it is 30, at R3 it is 24, at R2 it is 18 and at R1 it is 12.

From the data in the table we can draw the market supply curve for fried chicken pieces. This market supply curve is also upward sloping showing the positive relationship between the price and the quantity supplied.

Watch the following video clip to see how the market supply curve is derived: