Question

What is the difference between the supply and the quantity supplied of a product, say milk? Explain in words and show the difference on a graph with the supply curve for milk.

Short answer

The difference between supply and quantity supplied is that supply refers to the total amount of a product available in the market at different price levels over a specific period, while quantity supplied is the specific amount of the product that producers are willing to sell at a particular price level at a given point in time. To illustrate this on a graph, we draw a two-dimensional graph with the quantity of milk (in liters) on the horizontal axis (x-axis) and the price of milk (in dollars) on the vertical axis (y-axis). The supply curve is an upward-sloping line, indicating a positive relationship between the price and quantity of milk. The entire supply curve represents the supply of milk, whereas a single point on the curve (e.g., quantity supplied at a price of $2 per liter) shows the quantity supplied.

Step-by-step solution

Definition of Supply and Quantity Supplied

Supply refers to the total amount of a product that is available from a producer or supplier in the market at different price levels over a specific period. It represents the relationship between the quantity of a product that producers are willing to sell and the price of that product. On the other hand, quantity supplied is the specific amount of the product that producers are willing to sell at a particular price level at a given point in time. In summary, supply is the overall concept that shows the relationship between price and quantity, while quantity supplied is a specific point on the supply curve.

Drawing a Graph with the Supply Curve for Milk

To create a graph that shows the difference between supply and quantity supplied, first, we draw a two-dimensional graph with the quantity of milk (in liters) on the horizontal axis (x-axis) and the price of milk (in dollars) on the vertical axis (y-axis). Now, we need to draw a supply curve for milk. The supply curve is an upward-sloping line, indicating a positive relationship between the price and quantity of milk. This means that as the price of milk increases, the quantity of milk producers are willing to supply also increases. The curve indicates the different quantities supplied at various prices.

Illustrating the Difference between Supply and Quantity Supplied on the Graph

To show the difference between supply and quantity supplied on the graph, let's pick a specific price point, say \(2 per liter. This price point will be represented on the vertical axis (y-axis). Now, draw a horizontal line from the \)2 price level intersecting with the supply curve. From this point of intersection, draw a vertical line to the horizontal axis (x-axis). The point where this line intersects the x-axis represents the quantity supplied at a price of $2 per liter. This single point on the supply curve represents the quantity supplied. The entire supply curve represents the supply of milk because it shows the relationship between price and quantity supplied for all possible price levels. To summarize, the curve shows the supply of milk, whereas the single point where our selected price level intersects the curve demonstrates the quantity supplied. In conclusion, understanding the difference between supply and quantity supplied is crucial in understanding how markets function. The supply curve is a graphical representation of the relationship between the price of a product and the quantity producers are willing to sell. The quantity supplied, on the other hand, is a specific point on the supply curve that corresponds to the amount of a product producers are willing to sell at a particular price.