Glossary

Supply

Supply is how much sellers are willing to put up for sale at each possible price. The core pattern — the law of supply — is that a higher price draws out more output. Think about selling handmade posters at your campus market: if buyers pay $5 each, you might print a handful on the weekend. At$ 20 each, you clear space in your room, buy more ink, and print boxes of them. Higher reward, more effort — that is the law of supply in one sentence.

More precisely, supply is the entire relationship between price and quantity supplied, holding everything else constant — economists call that assumption ceteris paribus (Latin: 'all else equal'). On a standard market diagram, supply appears as an upward-sloping curve with price on the vertical axis and quantity on the horizontal. It is important to separate two very different things: a movement along the curve happens when the good's own price changes, sliding you up or down the existing curve. A shift of the whole curve happens when something else changes — input costs, technology, the number of sellers, or taxes. If a new printing technology halves your ink cost, you supply more posters at every price, and the whole curve moves to the right.

Q_s = c + dP, \quad d > 0

Linear supply curve

A simple linear supply curve writes quantity supplied as rising in price:

d

is the slope — how strongly sellers respond to a price change — and

c

is the intercept, set by everything that can shift the curve (input prices, technology, seller count, taxes).

Law of supply: The principle that, all else equal, a higher price leads sellers to offer a greater $Q_s$ . It is why the supply curve slopes upward.
Quantity supplied vs. supply: Quantity supplied ( $Q_s$ ) is a single point on the supply curve — the amount offered at one specific price. Supply is the whole curve. A price change moves $Q_s$ along the curve; a change in costs, technology, or seller count shifts the entire curve.
Producer surplus: The difference between the price a seller actually receives and the minimum they would have accepted. It is the area above the supply curve and below the market price — see producer surplus.
Market equilibrium: The price at which $Q_s$ equals quantity demanded, so the market clears with no surplus or shortage. The supply curve is one of the two curves that determine it — see market equilibrium.