Supply Function Tutorial

A supply function represents how much of a good or service a producer/supplier will supply at a price of the product and combinations of other factors.

 What is Supply Economics

Quantity Supplied = S(Price, Contributing factors)

 

Supply Function Curves are generally upward sloping.

Example: If the supply of pizza is affected by pizza’s price, the price of tomatoes and the price of cheese, the supply will look like this:

QsPizza =       10        +     6Ppizza               -    3Ptomatoe           -                    2Pcheese

 

Where:

QsPizza = Quantity supplied of pizza

P = price

10 = Number of pizza supplied if all prices are zero

 

Quantity supplied goes up as the price of pizza goes up and it quantity supplied goes down as the price of cheese and tomatoes go up.

 

 

 

Supply functions tend to slope upwards.