A supply schedule is a schedule showing the quantity of a good or service that producers will offer at various prices during a specific period of time.
A supply schedule is used to plot a supply curve. How many hours would you work at $5.00 an hour? How about $9.00? $20? $50? $150? If you make a table with the number of hours you would work at each wage (price for your labor), you have created your supply schedule. A supply schedule can be created for any good or service. Draw the supply curve by plotting the data points. Economists put the price on the vertical axis and the quantity producers would be willing to supply at a given price on the horizontal axis.
A company’s supply curve illustrates the number of goods and services the company is willing to supply at every price. The quantity supplied and price are directly related, meaning that as the price of a good or service increases, the quantity producers are willing to supply increases, and vice versa. The amount a producer is willing to supply of a good or service at a specific price is represented by a point on the supply curve. The production process and outside influences are held constant. Outside influences include the technology, input costs, regulations, the number of firms in the industry, future expectations, regulations, and tax rates. A change in any of these results in a new supply curve, which economists refer to as a change in supply.
For example, assume Jane is a babysitter. She is willing to work more hours if she is paid a higher wage. The table below is Jane's supply schedule and will be used to graph her supply curve. At the lower prices, Jane may be willing to babysit infrequently, more as a neighborly gesture than as an income-generating venture. At these low prices, she would prefer seeking alternative employment or spending time with her friends. However, as the price increases, Jane realizes that she would prefer babysitting to another job that is more restrictive. Higher prices provide an incentive to forgo hanging out with friends to earn more money.
Jane's supply curve is plotted by plotting the number of hours she would babysit at every price, over a defined period of time. Her wage (price) is on the vertical axis, and the number of hours she is willing to work per month is on the horizontal axis.
The market supply schedule and curve are for an entire community and both include all of the babysitters. The market supply curve is drawn by plotting the total number of hours all the babysitters would babysit at each price. Note that the supply curve assumes that the producer’s costs and other variables that impact the supply remain unchanged.
Economists plot the demand curve and the supply curve together to determine the equilibrium price and equilibrium quantity of a good or service. At equilibrium, there would not be a surplus or shortage of the good or service.