Interpreting A Supply Curve

Watch the following video clip about interpreting the supply curve:

Now note the following:

  • how the supply curve represents the law of supply
  • how an upward movement along the supply curve occurs when the price of a fried chicken piece increases

  • how a downward movement along the supply curve occurs when the price of a fried chicken piece decreases

Activity

Use the following supply curve and answer the following questions:

  1. Which variable is indicated on the horizontal axis?
  2. Which variable is indicated on the vertical axis?
  3. What is the quantity supplied (in packets of cookies) at a price of R2?
  4. What is the quantity supplied (in packets of cookies) at a price of R5?
  5. What happens to the quantity of packets of cookies supplied when the price declines? It (decreases; increases; stays the same).
  6. What happens to the quantity of packets of cookies supplied when the price increases? It (decreases; increases; stays the same).
  7. A (negative; positive) relationship is illustrated between the two variables (P and Qs)?
  8. This relationship between P and Qs is so important that it carries the status of a “law” which is referred to as the law of (demand; supply).
  9. Would there be any shift of the supply curve if the price were to change in this example?
  10. Would there be any movement along the supply curve if the price were to change in this example?
  11. If the price increases, is there an upward or downward movement along the supply curve?
  12. If the price decreases, is there an upward or downward movement along the supply curve?
Click to see the answer
  1. quantity
  2. price
  3. 20
  4. 50
  5. decreases
  6. increases
  7. positive
  8. supply
  9. No, it only shifts if a non-price factor changes.
  10. yes
  11. upward
  12. downward