After you have worked through this section of the learning unit, you should be able to:
- interpret the supply schedule and use a supply schedule to explain the law of supply
The law of supply, like the law of demand, can be expressed by means of a supply schedule. A supply schedule is a table that indicates the quantity of a product supplied at each price.
The table below is a hypothetical supply schedule for fried chicken pieces by an individual supplier called Funky Chicken. The second column contains different prices for fried chicken pieces. The third column contains the quantity of fried chicken pieces that will be supplied at each price during a particular week.
Supply schedule for fried chicken pieces
|Combinations||Price of fried chicken per piece (rand)||Quantity of fried chicken pieces supplied
According to this table (given the fact that all the other factors that influence supply stay the same), at a price of R7 per fried chicken piece, the quantity supplied will be 14. If the price of fried chicken pieces decreases to R6, the quantity supplied will be 12; at a price of R5, the quantity supplied will be 5; and so on.
Can you see how the quantity supplied decreases as the price of a fried chicken piece decreases? And how the quantity supplied increases if the price increases?
This supply schedule demonstrates the law of supply – showing that as the price increases, the quantity supplied increases; and as the price decreases, the quantity supplied decreases.
Watch the following video clip about the supply schedule:
Watch the following video clip for an explanation of what happens if the quantity supplied decreases from R7 to R2, and what happens if the price increases from R3 to R6, and how this schedule is used to demonstrate the law of supply:
Do the following activity to determine if you understand the supply schedule. We will use this activity to draw the supply curve in the next section:
The following table indicates the supply of dried red meat (known as biltong in South Africa):
|Price per kg||Quantity supplied in kg|
- What is the quantity supplied at a price of R50?
- The quantity supplied (increases; decreases) as the price declines from R40 to R20.
- By how much does the quantity supplied change if the price changes from R40 to R20? It changes by ______ kilograms.
- What happens to the quantity supplied if the price increases from R20 to R50? It increases by ____ kilograms.