Supply curve

Goods and services are offered and demanded on the free market. On the supply side, there are different providers depending on the type of good or service. The supply quantity of these goods depends on the price, the corresponding graphic representation is the supply curve.

Supply curve

The supply curve shows the amount of a certain good or service depending on the price, with the supply amount being plotted on the abscissa. The providers will offer more goods of this type at a higher price, and less will be offered at lower prices.

Other courses of the supply curve are rather rare, for example in the case of perishable goods. There, the supply volume can increase even if prices fall. Classic goods and services, such as real estate, are offered more frequently when prices rise or, vice versa, the price must first rise until another provider decides to offer his property on the market.

Shift in the supply curve

The supply curve can shift under certain conditions. This could be the case with real estate if the state subsidizes new residential construction and accordingly more new buildings are built. In this case, the supply curve shifts to the right, and more providers will offer the good at the same prices. A shift to the left can arise when raw materials for building real estate become more expensive.

Summary

  • The supply curve shows how much a good is in a market at a certain price
  • with rising raw material prices for goods, the curve shifts to the right
  • to the left when commodity prices fall
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