What is called the graphical representation of the direct relationship of price and the quantity of product sold by producers?

The supply schedule is a graph showing how many products are demanded from customers at a specific price based on the supply curve. The graph will depict the price on the left vertical axis of the chart, and the quantity of the supply will be on the horizontal axis.

The supply schedule is the table that shows the relationship between price and quantity, and the supply curve is the graphical representation of the supply schedule.

What Does Supply Schedule Mean?

Businesses make use of the supply schedule to understand how many products were sold at what price. The supply curve can show if an increase in your price will increase the company’s willingness to produce a product. Management can use this schedule to determine at what price they need to sell their products and how many products they need to provide.

Factors that influence the number of products that a company supply includes:

• Political conditions
• Production costs
• Price of a substitute product
• Complementary products

How a Supply Schedule Works

If everything is kept equal and the price of a product increases, then the quantity that is supplied to that product will increase. This will indicate a supply curve that will move upward from left to right.

You will need to draw a new supply curve if anything besides the price or the quantity of the product changes. Let’s take the example where new pumpkin farmers enter a market, and this increases the number of products that can be supplied in the market. A new supply curve will be added that has shifted to the right. Technology is one of the leading causes of shifts in the supply curve.

The reverse of this can also happen where the supply curve can shift to the left. This occurs when there is a change in the price of the production of a product.

Uses of the Supply Curve

The supply curve can be used to supply the consumer surplus. The consumer surplus is the difference between the price of the product that the customer is willing to pay and the amount that the customer pays for the product.

The supply curve is used by economists, governments, and manufacturers to understand the behavior of customers in a market. It helps to analyze how well the economy is performing or how they can make changes to a market to boost the economy.

Producers and manufacturers use the supply curve to understand what products are required in the market and what price they need to charge. Producers will not be willing to supply products if they cannot get the right price for their products

Other economic concepts that can be understood with a supply curve are price ceilings, price floors, consumer and producer surplus, market equilibrium, and market structures.

Supply Schedule Examples

Example 1

Sandy makes handbags and sell them from her house. She sells 50 bags for the price of $10 per bag, it costs her $2 to make a handbag. Leaving her a profit of $5 per bag. She found out from Clara that owns a handmade jewelry business that she can be more profitable selling jewelry.

Clara earns $20 when she sells 100 pieces of jewelry. She receives a profit of $10 per piece of jewelry. Sandy thinks this will be more profitable than her $2 per product. Sandy decided to make jewelry, and she can make 100 pieces. She believes that her customers will be willing to pay $25 for the 100 pieces of jewelry. Sandy would like to produce 125 pieces of jewelry, but she is constrained by the number of hours that she must provide the jewelry. If she wants to increase the number of products that she can make, she will have to hire someone else to assist her with the work.

In moving over to the new jewelry market, Sandy will shift the supply curve to the right, and a new supply curve will be added. There will be more products available on the market.

Example 2

Below is a supply schedule for a product with different quantities and prices per quantity.

There is a direct relationship between the price and the quantity that the supplier is willing to supply. These points can be plotted on a Cartesian coordinate system, and a trend line can be drawn through the points.

The supply will always be in the first quadrant in a Cartesian coordinate system because the price and the quantity of the product can never be negative numbers. You will find that the supply curve typically intercepts the vertical axis at some point above zero because suppliers will not produce products that are priced below the production costs.

Supply Schedule Conclusion

• The supply schedule is a graph that shows you how many products are demanded from customers at a specific price based on the supply curve.
• The supply curve can show if an increase in your price will increase the company’s willingness to produce a product.
• Factors that influence the number of products that a company supply includes:
  • Price of a substitute product
• Uses of the supply curve
  • The supply curve can be used to supply the consumer surplus
  • The supply curve is used by economists, governments, and manufacturers to understand the behavior of customers in a market
  • Producers and manufacturers use the supply curve to understand what products are required in the market and what price they need to charge.

FAQs

1. What is a supply schedule?

A supply schedule is a graph that shows you how many products are demanded from customers at a specific price based on the supply curve. The graph depicts the relationship between the price of a product and the quantity that is supplied by the producers in the market.

2. Why is the supply schedule important?

The supply schedule is important because it allows producers and manufacturers to understand the behavior of customers in a market. The curve can be used to supply the consumer surplus, and it can be used by economists, governments, and manufacturers to understand the needs of the customers.

3. What are the types of supply schedules?

The types of supply schedules are: Linear supply schedule and  Nonlinear supply schedule

4. How do you make a supply schedule?

The supply schedule is made by plotting the points of the supply curve and then connecting the points with a trend line. The trend line will show you the relationship between the price and quantity supplied in the market.

To make a supply schedule, you first need to collect data on the quantity that is supplied at different prices. The data can be collected from surveys or interviews with suppliers. The data can then be plotted on a Cartesian coordinate system, and a trend line can be drawn through the points.

5. What does the supply schedule show you?

The supply schedule shows you the quantity that is supplied at different prices in a market. This information can be used by producers and manufacturers to understand what products are required in the market and what price they need to charge.

When demand rises there is a shortage in the supply and when a supply is enough the demand falls short, so there is an inverse relationship between these two elements.

Nowadays people are very selective regarding the things they use, carry and wear. They are very conscious about what to purchase and what not to? A little change in the prices or the availability of a commodity affects people drastically.

The demand and supply model is helpful in simplifying how the price and quantity traded are ascertained in the market as well as how the outside forces affect the demand and supply of the commodity. Go through with this write-up to get a clear understanding of the difference between demand and supply.

What is a Market?

Any arrangement wherein two parties, i.e. a buyer and seller are brought together to enter into an exchange of goods and services for money.

Also Read: Difference Between Industry and Market

Content: Demand Vs Supply

Comparison Chart

Basis for Comparison	Demand	Supply
Meaning	Demand is the desire of a buyer and his/her ability to pay for a particular commodity at a specific price.	Supply is the quantity of a commodity which is made available by the producers to its consumers at a certain price.
Curve	Downward-sloping	Upward-sloping
Slope
Relationship with Price	Inverse Relationship	Direct Relationship
Represents	Customer	Firm
Effect of Variations	When the demand increases but supply remains constant, it leads to shortage but when the demand decreases and the supply is constant leads to surplus.	When the supply increases but demand remains constant, it leads to surplus but when the supply decreases and the demand is constant it results in shortage.
Determinants other than price	Taste and Preference	Price of the Resources and other inputs
Number of Consumers	Number of Producers
Price of Related Goods	Price of factors of production
Consumer Income	Taxes and Subsidies
Consumer Expectations	Technology

Definition of Demand

Demand is the customer’s desire for a particular product, at the given price, which he/she is ready to buy in one market at different prices during a given period of time. So, there are two aspects of demand:

1. Willingness to buy: It is the customer’s desire for the good.
2. Ability to pay: It is the customer’s purchasing power to pay the price for the goods.

The demand of the customers depend on their needs and wants. Further, to constitute an effective demand, there must be

• A desire
• Means to purchase and
• Willingness to use those means for the purchase.

For example, A beggarman also has a desire for food and clothes, but he does not have the money to buy them, so it does not amount to an effective demand.

Law of Demand

When there is a rise in the price of the product, the customers demand less quantity, whereas when the prices fall, the demand for the product will rise.

Here, you can see in the graph, wherein the vertical axis represents the price of a commodity, and the horizontal axis indicates the quantity demanded. The demand curve is an indicator of the inverse relationship between price and quantity demand.

Also Read: Difference Between Demand and Quantity Demanded

Definition of Supply

Supply implies the quantity (how much) of a product or service which are offered by the manufacturer for sale at various prices to the customers, during a given period of time. So, there are two determinants of supply:

• Willingness: The quantity of the product which the producers want or are prepared to sell at various prices.
• Ability to supply: How much of a product is available with the producers to sell at a time.

It should be noted that supply is anything that the firm has offered for sale in the market.

Law of Supply

When there is an increase in the price of the commodity, the quantity of the products produced and available for sale will also increase, and when the prices drop, the supply also decreases. this is due to the fact that the higher the price, the higher will be the profit margin.

Here in the graph, the vertical axis represents the price of a commodity, and the horizontal axis indicates the quantity supplied. Supply curve represents a direct relationship between price and quantity supplied.

Upcoming points will explain to you the difference between demand and supply:

1. Demand is the willingness and paying capacity of a buyer at a specific price. On the other hand, Supply is the quantity offered by the producers to its customers at a specific price.
2. While the demand curve is downward to the right, the supply curve is upward to the right. And so the demand curve is a negative slope whereas the supply curve is a positive slope.
3. Demand has an indirect relationship with the price i.e. as the price increases, quantity demanded decreases and vice versa. Conversely, the supply has a direct relationship with price in the sense that when the price increases, quantity supplied increases and vice versa
4. While demand is an indicator of customers or buyers, supply represents the firm or producers of the product.
5. Demand for a product is influenced by five factors – Taste and Preference, Number of Consumers, Price of Related Goods, Income, Consumer Expectations. In contrast, Supply for the product is dependent on Price of the Resources and other inputs, Number of Producers, Technology, Taxes and Subsidies, Consumer Expectations.
6. When the demand increases but supply remains constant, it leads to shortage but when the demand decreases and the supply is constant leads to surplus. As against, when the supply increases but demand remains constant, it leads to surplus but when the supply decreases and the demand is constant it results in shortage.

Video: Demand Vs Supply

Determinants of Demand

The demand for a good or service is determined by the given factors:

1. Price of the commodity: We know that demand and price, hold an inverse relationship, so whenever, the price of the commodity shoots up, the quantity demanded experiences a drop.
2. Price of related goods: Related goods can be of two types:
   1. Complementary goods: Goods which are consumed together are called complementary goods, such as shoes and socks, wire and plug, ink pad and stamp. A rise in the price of one will result in the demand of the other to fall.
   2. Competing goods or substitutes: Goods which are consumed to satisfy the same want are counted as substitutes for one another, such as bulb and tube light, soap and body wash, shoes and slipper, etc. In the case of substitute products, a rise in the prices of a product leads to the rise in demand for its substitutes.
3. Income of Consumers: The purchasing power of a consumer depends primarily on his income. Therefore, the higher the income of the consumer, the higher will be the quantity demanded.
4. Tastes and Preferences: Consumer tastes and preferences change over time and it has been observed that trending items often fetch high demand, as compared to the outdated one.
   For example: During the lockdown period, a rise in the demand for laptops has been recorded, because work from home is given by many companies.
5. Consumer Expectations: When there is an expectation of rise or fall in prices or any sudden change in the economy, it affects the current demand for the product.
   For instance: You might have noticed that the demand for the groceries and essential items increased prior to the lockdown became effective countrywide.

Determinants of Supply

The supply of the good or service is determined by the following factors:

1. Price of the Commodity: The higher the price of the commodity, the higher will be its quantity supplied. This is due to the fact that the firm produces goods and services with an aim of earning profits and when the price increases, the profit margin of the firm also tends to rise.
2. Prices of Related Goods: When there is a hike in prices of the related goods, then obviously, it is a profitable option for the firm to produce and sell the related goods, then the good in question, and this will lead to the fall in in the quantity supplied of that commodity.
   For example: If there is a rise in the price of pulses, the farmers will use their resources to grow pulses, rather than other cereals, as it is a more profitable option to them.
3. Prices of factors of production: The cost of production depends on the factors of production, which influences the supply of the product. A hike in the price of input will automatically increase the cost of production and affects its profitability.
   For example: Suppose the prices of petrol shoot up, which leads to an increase in the cost of production as well as transportation of the goods.
4. Technology: Technology has a great impact on production, as new and improved methods are developed, which are better in terms of productivity and quality of the goods while using the same amount of resources. So, this results in the increase in quantity supplied of some products, while decreasing the quantity supplied of another which are displaced.
5. Producers: If there are many firms in the market producing the same product, then obviously the supply will be more.
6. Taxes and Subsidies: Government imposes taxes on the production of goods and a rise in the rate of taxes will lead to a rise in the cost of production. Therefore, only when there is a rise in its prices, the quantity supplied will be increased. Contrary to this, Government subsidies, often bring down the cost of production, so the firms can easily increase supply.

Equilibrium Point

The equilibrium point is a situation in which the quantity demanded and quantity supplied intersect, representing equilibrium price. It is the point at which the buyers and sellers, both are satisfied. Also called as the market equilibrium or market-clearing price.

Let’s have a look at the example:

Have a look at the graph representing the demand and supply for the commodity at different price range:

Here you can see that at point ‘E’ both demand and supply curve intersect each other.

The equilibrium in the quantity demanded and supplied will help the firm to stabilize and survive in the market for a longer duration while the disequilibrium in these will have severe effects on the firm, markets, other products and the whole economy will suffer as a whole.

Conclusion

The market is flooded with several substitutes in each product category and a sudden rise or fall in the prices will have an impact on these products and their demand and supply may increase or decrease. In such a situation, an equilibrium must be maintained in the quantity demanded and the quantity supplied without neglecting the price factor at which the product is supplied.