What is a Supply Schedule?
Definition: Supply schedule is an economic graph that depicts how the number of goods or services in the market relates to the price of those goods or services.
Supply is a vital part of economics and this is evident by the fact that there is an entire segment about supply and demand. Supply in itself can be described as the quantity of products that a company is willing to make available in the market. In this case, we are interested in the supply schedule which refers to the relationship between the price of commodities or services and the amount of those goods or services that are supplied into the market.
Businesses tend to supply more of their goods when prices in the market are high in the hope that they can sell more at high prices. However, the reverse is true where the amount of goods and services supplied to the market reduces when the prices are low. This is the basic understanding of the relationship between price and supply. A supply schedule can thus be used to help companies achieve more efficient supply of products in the market when adjusting to account for different prices.
Supply Schedule Categories
Supply schedules are usually categorized as individual supply schedules or market supply schedules.
Individual Supply Schedule
This type of supply schedule focuses on a single firm’s produce relative to the price of that product. This means that it keeps track of the price of each unit of a commodity and also the quantity of the commodity that the company supplies. Below is an example of an individual supply schedule.
| Price per unit of product X (Px) | Quantity supplied of product X (Dx) |
|---|---|
| 100 | 1,000 |
| 200 | 2,000 |
| 300 | 3,000 |
| 400 | 4,000 |
| 500 | 5,000 |
The above chart demonstrates the impact of higher prices on the supply where higher prices are characterized by higher quantity supplied as supplies aim to take advantage of the higher prices so that they can earn more. The reverse is also true where the lower the prices of a commodity, the lower the supply.
Market Supply Schedule
This is where different individual supply schedules are combined so that they can demonstrate the relationship between commodities supplied to different customers and the price. This option is also called the aggregate supply schedule. Below is an example of a market supply schedule.
| Price per unit of product X (Px) | Quantity supplied by Company A (Qa) | Quantity supplied by Company B (Qb) | Market Supply (Qa + Qb) |
|---|---|---|---|
| 100 | 1,000 | 3,000 | 4,000 |
| 200 | 2,000 | 4,000 | 6,000 |
| 300 | 3,000 | 5,000 | 8,000 |
| 400 | 4,000 | 6,000 | 10,000 |
| 500 | 5,000 | 7,000 | 12,000 |
Data compiled in a supply scheduled can be used to create a supply chart where the supply curve can be plotted. Such a graph would be used to demonstrate how different price levels would affect the quantity supplied to the market. Supply and demand curves are usually plotted together and so economists can use this approach to identify a market equilibrium point.
Factors that Affect Supply
Judging by the above venture into what supply schedule is all about, it is safe to conclude that the price of a commodity or product is one of the major factors that influence how much of the commodity will be supplied into the market. However, there are a few other factors that may affect the supply of a commodity as shown below.
Sometimes the price of one product might have a significant impact on the demand for another product but it depends on the relationship between the two products. The price of one product in the market may cause another similar product to go up and down depending on the level of demand and prices.
Technological changes
Technology is supposed to help improve how we do things and this also applies to the supply of commodities. A company that leverages newer technology can potentially produce more and thus supply more to the market.
Cost of inputs
Producers aim to achieve the right balance when it comes to the price of inputs. If they can achieve this, then they can lower their production costs, allowing them to secure more inputs and thus increasing their supply to the market.
Number of competitors in the industry
If there is low competition in the market, then companies have a better chance of making more sales and thus such a situation encourages them to supply more of their product to the market. The reverse is also true where a company will likely reduce its supply to avoid surpluses in the market.
There are more factors that may affect supply but at the end of the day, the supply schedule of a business acts as a guide that helps the business to determine how much to supply to the market.