09 Jun Supply Schedule
What is a Supply Schedule?
Definition: A supply schedule provides data about the quantity of goods or services that will be supplied at various price points.
What does Supply Schedule mean?
There is a direct relationship between the price of a good and the quantity that manufacturers are willing to provide. At higher prices, more of the good will be supplied. Conversely, if prices are low, producers will reduce the level of production and supply.
A supply schedule can be presented in a tabular form. The table will have two columns, price and output. The different rows of the schedule will list the output at varying price points.
A supply schedule can be made at the individual level or at the aggregate level. Summing up the individual supply schedules will result in an aggregate schedule.
The data in the supply schedule can be used to plot the supply graph. This illustrates the quantity that will be supplied at different price levels. It’s important to remember that when the supply graph and the demand graph are plotted together, it is possible to discover the level at which there will be market equilibrium. This is the point at which the supply and demand curves intersect.
Example of Supply Schedule
Haynes Industries produces electric blankets. It is willing to supply greater quantities of its product at higher prices. This is what its supply schedule for the month of May 2018 looks like:
|Price||Number of electric blankets|
Why is the company willing to produce more at higher prices? Its current employee strength allows it to manufacture 3,000 blankets per month. If it has to increase this number, it is necessary to employ additional workers on an hourly basis.
This pushes up the cost of production. The factory also has to work extra shifts. This involves more expenditure. The owner of Haynes Industries also wants to earn a higher profit.
A supply schedule provides details about the exact quantities that producers would be willing to sell at different prices during a certain time period.