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The Nature of Markets - Supply

The principles behind what we have looked at with demand equally apply to supply. Each individual seller of a good or service will have their own schedules - the amount they are willing to supply at different prices.

The market supply therefore is the combined total of all the individual supply schedules in that market. The total supply of tomato soup, for example, is the sum of all the different producers of tomato soup in the market - Heinz, Campbell's, Cross and Blackwell as well as all the other own brand labels.

The market supply can be drawn as a graph in the same way that we did with demand but the curve goes upwards from left to right. This shows that at higher prices, suppliers are willing to sell more than at lower prices - fairly obvious when you think about it!

The graph will look like this:

Please note: to make full use of the activity, your system must have Macromedia Flash Player 6 (or higher) installed - this can be obtained from the Macromedia Web site. Interactive Macromedia Flash resources developed by Biz/ed are designed to work both with and without the use of a mouse and be compatible with as many assistive technologies as possible (further information on our accessibility features is available). If you cannot view the interactive resources for whatever reason a static annotated image will appear instead, if you cannot view the static image it will be replaced by some descriptive text.

Shifts in Supply

As with demand, the supply curve also shifts when factors affecting supply change. See if you can work out which way the curve will shift as you did with demand.

Experiment with the diagram and the slider to help your thinking.

Please note: to make full use of the activity, your system must have Macromedia Flash Player 6 (or higher) installed - this can be obtained from the Macromedia Web site. Interactive Macromedia Flash resources developed by Biz/ed are designed to work both with and without the use of a mouse and be compatible with as many assistive technologies as possible (further information on our accessibility features is available). If you cannot view the interactive resources for whatever reason a static annotated image will appear instead, if you cannot view the static image it will be replaced by some descriptive text.

Now see if you can work out whether changes in the following factors cause a movement to the left (fall) in supply or a movement to the right (rise) in supply.

Please note: to make full use of the activity, your system must have Macromedia Flash Player 6 (or higher) installed - this can be obtained from the Macromedia Web site. Interactive Macromedia Flash resources developed by Biz/ed are designed to work both with and without the use of a mouse and be compatible with as many assistive technologies as possible (further information on our accessibility features is available). If you cannot view the interactive resources for whatever reason a static annotated image will appear instead, if you cannot view the static image it will be replaced by descriptive text.

To perform the drag and drop exercise using the keyboard tab to the list of items. Use l and r to move the items to the left and right containers respectively and tab to move to the next item. To mark the exercise press the return key and to reset the resource use the delete key.

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