Supply Curve

What this diagram shows

The supply curve shows the relationship between the price of a good and the quantity that producers are willing and able to supply at each price level, holding all other factors constant. It typically slopes upward from left to right, demonstrating the law of supply - as price increases, quantity supplied increases. This positive relationship exists because higher prices make production more profitable, encouraging firms to supply more. Understanding supply curves is fundamental for analysing market equilibrium and predicting how markets respond to various economic changes.

Key points

• The supply curve slopes upward due to the law of supply - higher prices incentivise greater quantity supplied
• Price is plotted on the Y-axis and quantity supplied on the X-axis
• A movement along the curve occurs when only price changes, while a shift of the entire curve happens when non-price factors change
• The curve shows the minimum price producers will accept for each quantity - reflecting marginal cost of production
• Individual firm supply curves can be added horizontally to create market supply curves

Exam board notes

All major exam boards treat this diagram identically, though OCR places slightly more emphasis on the mathematical relationship and may require students to work with supply equations. CIE occasionally asks for more detailed analysis of the factors causing supply curve shifts in their extended response questions.