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103 
 
5
The supply schedule 
The 
supply curve 
shows the quantity of a good which would be supplied by producers at a given price.
5.1 The concept of supply 
Supply 
refers to the quantity of a good that existing suppliers or would-be suppliers would want to 
produce for the market at a given price. 
As with demand, supply relates to a period of time – for example, we might refer to an annual rate of 
supply or to a monthly rate. 
The quantity of a good supplied to a market varies up or down for two reasons. 
(a) 
Existing suppliers may increase or reduce their output quantities. 
(b) 
Firms may stop production altogether and leave the market, or new firms may enter the market 
and start to produce the good. 
If the quantity that firms want to produce at a given price exceeds the quantity that households 
(consumers) would demand, there will be an 
excess of supply
, with firms competing to win what sales 
demand there is. Oversupply and competition would then be expected to result in price competitiveness 
and 
a fall in prices
. 
As with demand, a distinction needs to be made. 
(a) 
An individual firm's supply schedule is the quantity of the good that the individual firm would 
want to supply to the market at any given price. 
(b) 
Market supply is the total quantity of the good that all firms in the market would want to supply 
at a given price. 
5.2 The supply curve
A 
supply schedule
and 
supply curve
can be created both for an individual supplier and for all firms 
which produce the good.
A supply curve is constructed in a similar manner to a demand curve (from a schedule of quantities 
supplied at different prices) but shows the quantity suppliers are willing to produce at different price 
levels. It is an