What Is a Market Supply Curve?

What Is a Market Supply Curve?

In economics, a market supply curve is a model showing the direct relationship between the price of a good or service and the quantity of that good or service supplied to the market by producers. The upward slope of the supply curve shows that as the price of a good or service increases, producers in the market are willing and able to produce more of the good or service for sale to buyers in the market.

A market supply curve represents the rational economic behavior of all producers in a competitive market when the market price of a good or service rises or falls and all other potential market influences are held constant. In this context, a change in price is understood as a movement along the supply curve. Supply curves can also shift position.

A shift of the supply curve to the right or left is produced by any event, excluding a change in price, that causes producers to offer more or less of a good or service to the market. A shift of the market supply curve can be caused by a change in the cost of raw materials, a change in production technology, a change in the profitability of a closely related good, a change in producer expectations related to future market conditions or a change in the overall number of producers participating in a market.