The Supply Curve

When economists view economics from the supply side they are thinking about how a business will seek to provide an increase in quantity of goods or services to meet the increase in prices. Or in other words, the supply side attempts to give the business owner an idea of how much service or how much product to bring to market. Supply side economics attempts to avoid being short of demand while providing an indicator of how not to over produce and waste resources. By using the supply schedule a business owner learns how much to supply to market.

The supply schedule is a categorization of amount supplied in comparison with prices paid. When the consumer is willing to pay a higher price, then the business attempts to meet the need with increased supply. After all, businesses operate to make more money. So, to summarize, when customers pay higher prices, businesses provide more supply.

When economists, entrepreneurs, and business owners graph the supply schedule you have a supply curve. The supply curve gives these people an understanding of the amount of supply that is appropriate for the level of price. Simply speaking, the supply curve gives economists a better visual understanding of the supply schedule. Later, when we combine the supply curve with the demand curve you will see another purpose of these graphs with the point of equilibrium.

To apply this example let's simply take a product such as chips. If students at the high school are willing to pay higher prices for chips, then the store will provide more chips. The result is an increase in revenue for the store.