Swag & Co is a company that makes only white sneakers.
We want to know how many white sneakers Swag & Co will produce at different prices. If white sneakers are selling for $200, Swag & Co would make a lot of money so they would be willing to make (supply) 3 pairs at that price. At a price of $150 they would not be making as much money so they would only make 2 pairs. At a price of $100 they would barely be making any money selling white sneakers so Swag & Co would only supply 1 pair.
We can make Supply Schedule which shows the relationship between the price and the quantity supplied.
|Price of White Sneakers ($)||Quantity Supplied|
Let’s graph this table out. Our Y-axis is going to be price; the same as it was when we graphed a demand schedule. Our X-axis this time will be quantity supplied.
When we plot our points, we get the following output...
...which results in the following linear relationship!
Notice how the supply curve is sloped upwards. This showcases a very key economic concept: Law of Supply!
The Law of Supply states that holding everything constant, when the price of a product increases, the quantity supplied increases.