After you have worked through this section of the learning unit, you should be able to:
- draw a supply curve based on data in a supply schedule and use it to explain the law of supply
It is also possible to demonstrate the law of supply by using a graph. To do this, you have to use the information in the supply schedule. Study the following graph to see how the information in the table is plotted as points. When the points are joined, we have a supply curve.
The vertical axis shows the price (P) of a product or service, for example, fried chicken pieces, and it is labelled “Price”. The horizontal axis measures the quantity supplied (Qs) and it is labelled “Quantity supplied”.
The first point corresponds to a price (P) of R7 and a quantity (Qs) of 14 pieces of fried chicken, as can be seen from the vertical axis and horizontal axis respectively.
To obtain the second point, we obtain the point that represents a price of R6 and a quantity of 12. To draw the next points, we obtain the point that represents a price of R5 and a quantity of 10; the point that represents a price of R4 and a quantity supplied of 8; and so on.
By connecting these points, we obtain a line (shown as S). This, then, is our supply curve for fried chicken pieces.
Look carefully at the supply curve above. Can you see how the supply curve is labelled S? The supply curve shows how many pieces of fried chicken producers are planning to sell at each price. As you can see, the supply curve slopes upwards from left to right, showing a positive relationship between the price and quantity supplied.
Now watch the following video about drawing a supply curve:
Activity
Use the following supply schedule to draw a supply curve:
| Price of cookies (per packet) | Number of packets of cookies supplied |
|---|---|
| 1 | 10 |
| 2 | 20 |
| 3 | 30 |
| 4 | 40 |
| 5 | 50 |
