ECON101: Principles of Microeconomics

Just like we did with demand, it is essential to highlight that supply (a function) is not the same as quantity supplied (a variable). Supply is the relationship between a range of prices and the quantities supplied at those prices. On the other hand, quantity supplied is a certain point on the supply curve that indicates the number of units produced at a given price.

We can interpret supply as a function representing the minimum price a firm will accept to produce a specific quantity of a good or service. This supply function can change, as producers may choose to offer more or fewer units at the same price based on various factors. Can you think of factors that encourage a firm to produce more units at the same price?

Watch this video to review the law of supply and to see how factors affecting supply shift the supply curve.