Supply: b) The supply curve

The idea

The supply curve is a graphical representation of the relationship between the price of a good or service and the quantity that producers are willing and able to supply to the market at a given time, ceteris paribus. It typically slopes upwards from left to right, illustrating the law of supply: as the price of a product increases, the quantity supplied also increases, because higher prices offer a greater incentive for firms to produce more to maximise profit.

For example: If the market price of coffee beans rises, farmers will allocate more land and resources to growing coffee rather than alternative crops, resulting in an upward-sloping supply curve on a price-quantity diagram.

What earns the marks

• Definition of the supply curve as the relationship between price and quantity supplied.
• Recognition that the supply curve typically slopes upwards from left to right.
• Understanding that price is plotted on the vertical axis and quantity on the horizontal axis.
• Explanation of the profit motive as the primary reason for the upward slope of the curve.

Common mistakes and how to put them right

• Confusing the supply curve with the demand curve.

  Put it right: Supply slopes upwards while demand slopes downwards.

• Forgetting the ceteris paribus assumption.

  Put it right: The curve only shows the relationship between price and quantity, assuming all other factors remain constant.

• Plotting price on the horizontal axis and quantity on the vertical axis.

  Put it right: Price always goes on the vertical axis.

Exam tips

• Always label your axes clearly with 'Price' and 'Quantity' when drawing a supply curve to secure full marks for diagrammatic analysis.
• Label the supply curve itself with an 'S' to distinguish it from other curves on the same diagram.
• Use the profit motive to explain why producers are willing to supply more at higher prices in written answers.