Section Navigation pg-12
A Change in Market Price Leads to a Change in Desired Quantity Supplied

A change in market price leads to a movement along the supply curve in the same direction. Factors other than price can affect supply behavior, causing the entire supply relationship to change or shift. To the right, we show the effect of a price change on desired quantity supplied,8 as a movement along the supply curve. When market price increases, desired quantity supplied increases. When market price falls, desired quantity supplied falls.

At price P1 the desired quantity supplied is Q1. We see this by drawing a horizontal line from price P1 on the vertical axis to the Supply curve, S, then drawing a vertical line down to the horizontal axis, giving the quantity supplied. When price falls to P2, we use the same procedure to determine that desired quantity supplied falls to Q2; and when price increases to P3, we can easily see that desired quantity supplied increases to Q3.

back forward

As before, we write desired quantity supplied because this is the quantity the supplier wishes to sell. Consumers may not wish to buy that quantity at that price, so desired quantity supplied may differ from actual quantity sold.

Copyright © 1995-2005, Inc. - All Rights Reserved