If the cost of production increases, it means that at each price, fried chicken suppliers will now supply a lower quantity than before. The supply of fried chicken pieces will therefore decrease.
The relationship between the price of inputs and supply can be illustrated by using a supply schedule.
Study the supply table to the right to see how an increase in the cost of production will affect the supply schedule for fried chicken pieces.
Can you see how at each price, the supply of fried chicken pieces is lower?
At a price of R7, the quantity supplied is 44 instead of 48 pieces; at a price of R6, the quantity supplied is 38 instead of 42 pieces; at a price of R5, the quantity supplied is 32 instead of 36 pieces; and so on.
Supply schedule for fried chicken pieces
| Price of fried chicken per piece (rand) | Quantity of fried chicken pieces supplied (per week) | Quantity of fried chicken pieces supplied after the cost of production increases (per week) |
|---|---|---|
| 7 | 48 | 44 |
| 6 | 42 | 38 |
| 5 | 36 | 32 |
| 4 | 30 | 28 |
| 3 | 24 | 20 |
| 2 | 18 | 14 |
| 1 | 12 | 8 |
Let us see what happens to our supply curve for fried chicken pieces if the cost of production increases.