Market supply curve

A market supply curve is the summation of individual firms' supply curves. An important principle for market supply curves is that the market has to be perfectly competitive. This means that there is a large number of players (firms producing the same product) in the market and there is no dominant player that can manipulate prices. To understand market supply curve, we must first understand a supply curve. Supply Curves and Examples The supply curve for a firm shows the quantity of product that a firm is willing to produce for a given price of the product, assuming ideal business conditions. This relationship between price and quantity is shown in a graph with two axes, X and Y, where the X-axis represents the quantity of the product and the Y-axis represents the price of the product produced. This curve is always upward sloping, showing a positive correlation between a product price and the quantity produced by a firm. This means that if the price of a product increases in the market, then a firm will start producing more of that product. This is very logical, as a higher price will mean that the product is more profitable to the firm and hence they will start producing more of it.

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