The law of supply states that the rise in price leads to a rise in supply and a fall in price leads to a fall in quantities supplied, by keeping other things constant. There is a direct proportionate relationship between price and quantities demanded. So, the supply curve slopes upwards from left to right.
(i) Supply Schedule: A supply schedule is a statement which consists of quantities supplied at different levels of price. Supply curve slopes upwards and can be represented by the linear equation QS = a + bp, where QS is quantity supplied, ‘a’ and ‘b’ are constants, ‘p’ is price. If a =10 and b = 2 then the linear supply function when p is 1, 2, 3, 4 and 5, the same may be represented as follows:
QS=10+2p then we get the supply schedule as follows:
| QS=10+2p | Price | Quantity supplied |
| 10+2(1)= 12 | 1 | 12 |
| 10+2(2)= 14 | 2 | 14 |
| 10+2(3) = 16 | 3 | 16 |
| 10+2(4)= 18 | 4 | 18 |
| 10+2(5) = 20 | 5 | 20 |
Supply Curve: Supply Curve is a graphical representation of supply schedule. The supply curve slopes upwards from left to right to indicate that there is direct proportionate relationship between price and quantities supplied.
The supply curve can be shown as follows:
In the above diagram, quantity supplied is measured along ‘X’ axis and price is measured along ‘Y’ axis. The SS curve indicates the supply curve. This shows that there is a positive relationship between price level and quantity supplied.
