If the price increases, the quantity supplied increases.
Conversely, if the price decreases, the quantity supplied decreases.
Distinction between "quantity supplied" (a specific point) and "supply" (entire relationship).
Supply Schedule
Concept: A table showing the relationship between price and quantity supplied.
Measures quantity over a specific time period (daily, monthly, yearly).
Example: Grape Supply Schedule
Scenario A:
Price: $1 per pound.
Quantity: 1,000 pounds (using only fertile and cheap land).
Scenario B:
Price: $2 per pound.
Quantity: 2,000 pounds (buying more land, less optimal for grapes).
Scenario C:
Price: $3 per pound.
Quantity: 2,500 pounds (increased production, possibly using land for other crops).
Scenario D:
Price: $4 per pound.
Quantity: 2,750 pounds (maximizing land usage for grapes).
Plotting the Supply Curve
Axes:
Vertical: Price per pound.
Horizontal: Quantity produced (thousands of pounds, next year).
Points on Supply Curve:
A: $1, 1,000 pounds.
B: $2, 2,000 pounds.
C: $3, 2,500 pounds.
D: $4, 2,750 pounds.
Curve: Connect the points to form the supply curve.
A minimum price is necessary for starting production (not discussed in detail).
Key Takeaways
Price Change: Movement along the supply curve.
Next Steps:
Explore other factors held constant in this analysis and their impact on the supply curve.
Conclusion
This lecture focused on the fundamental concepts of supply and the graphical representation of the supply curve based on price changes. Future discussions will cover variables other than price that affect supply.