There are two sides to the market. We just discussed the demand side which is where consumers demand a certain amount of goods at different prices. Now, we’ll look at the supply side of the equation.
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|
Quantity Supplied is the amount of a good or service that a supplier is willing to supply at a given price.
QUANTITY SUPPLIED IS NOT THE SAME AS SUPPLY. This is a huge mistake people make in this course. What's the difference?
Supply is the relationship between price and quantity supplied and is usually shown as a line of a graph. Quantity supplied is a single point on that line.
Let’s graph this table out. Our Y-axis is going to price; the same as it was when we graphed a demand schedule. Our X-axis this time will be quantity supplied.
Now let’s plot out the points on our table. At a price of $200, Swag & Co is willing to supply 3 white sneakers. This point is shown as a red dot.
At a price of $150, Swag & Co is willing to supply 2 pairs of white sneakers. This point is shown as a red dot.