Definition of supply curve

The idea of supply curve it is used in the field of economics. Remember that a curve It is a line that allows developing the graphic representation of a magnitude according to the values ​​that one of its variables is acquiring. The concept of offer, on the other hand, it can refer to goods that are put up for sale on the market.

A supply curve, in this framework, refers to the amount of a certain product than a company is willing to sell still price hypothetical, keeping constant the rest of the factors that could alter the quantity supplied. There is a direct link between this quantity supplied and the price: the higher the price, the higher the profit for the company, which is therefore willing to sell as much of the product as possible.

The supply curve, in short, is considered of increasing type, because the higher the price, the greater the supply will also be. It can also be described as concave towards the axis of the ordered, and convex towards the abscissa; the quantities, in this case, are the prices.

In a graph, therefore, the supply curve specifies how many products the company intends to offer. business for every price. To a price P1, the seller is willing to offer a quantity Q1; to a price P2, offer the quantity Q2; and so on.

Suppose a trouser manufacturer wants to produce and offer 1000 pants At a price of 20 dollars. If the price rises to 25 dollars, the quantity supplied grows at 1100 pants. At a price of 40 dollars, the supply increases to 2500 pants. All these values, in a graph, they allow to obtain the supply curve.

There is also the demand curve, which is defined as the graphic representation of the relationship between the maximum quantity of a given good or service that a consumer would like to buy, and its price. Both curves are key to the theoretical analysis of the economy when studying prices.

From the intersection of the supply curve and the demand curve, arises the price of the product on the market, according to neoclassical economic theory. That intersection also marks the Balance between supply and demand.

Among the various concepts related to this topic is the elasticity, which can be defined as the percentage in which the quantity of goods offered varies at the moment in which the sale price goes through a variation of one percent. Elasticity belongs to the field of economics and its creator was Alfred marshall, an English-born economist.

Marshall relied on physics to find this variation (positive or negative, depending on the case) that occurs when one variable changes for another. It is important to note that the elasticity of the supply curve is linked to several factors, such as the availability of the necessary resources and the technological level of the company.

A nuance that we must clarify is that when talking about supply curve It is understood that the offer to which reference is made belongs to a single company, to the quantities of a product or service and their respective prices; if, on the other hand, the quantities offered by all the companies of a market or sector in particular, then the appropriate concept is the market supply curve (It could also be of the industry, depending on the case). This concept, in other words, represents the quantities that are put up for sale in a given market, at each price.