The Supply Schedule And The Supply Curve

Let's continue with our example of the market for maple syrup in Wichita. Who are the suppliers in this market? Since maple syrup is easy to transport, any producer on the continent can sell in Wichita. In practice, these producers are located mostly in the forests of Vermont, upstate New York, and Canada. The market quantity supplied is the amount of maple syrup all of these producers together would offer for sale in Wichita at each price for maple syrup.

Table 3 shows the supply schedule for maple syrup in Wichita—a list of different quantities supplied at different prices, with all other variables held constant. As you can see, the supply schedule obeys the law of supply: As the price of maple syrup in Wichita rises, the quantity supplied rises along with it. But how can this be? After all, maple trees must be about 40 years old before they can be tapped for syrup, so any rise in quantity supplied now or in the near future cannot come from an increase in planting. What, then, causes quantity supplied to rise as price rises?

Many things. First, with higher prices, firms will find it profitable to tap existing trees more intensively. Second, evaporating and bottling can be done more carefully, so that less maple syrup is spilled and more is available for shipping. Finally, the product can be diverted from other areas and shipped to Wichita instead. For example, if the price of maple syrup rises in Wichita but not in Kansas City, producers would shift deliveries away from Kansas City and toward Wichita.

Now look at Figure 4, which shows a very important curve—the counterpart to the demand curve we drew earlier. In Figure 4, each point represents a price-quantity pair taken from Table 3. For example, point F in the figure corresponds to a price of $2.00 per bottle and a quantity of 4,000 bottles per month, while point G represents the price-quantity pair $4.00 and 6,000 bottles. Connecting all of these points with a solid line gives us the supply curve for maple syrup, labeled with an S in the figure.

The supply curve shows the relationship between the price of a good and the quantity supplied, holding constant the values of all other variables that affect supply. Each point on the curve shows the quantity that sellers would choose to sell at a specific price.

Notice that the supply curve in Figure 4—like all supply curves for goods and services—is upward sloping. This is the graphical representation of the law of supply.

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