man68624_ch04.qxd 72 1/22/03 PART 2 9:52 AM Page 72 SUPPLY AND DEMAND I: HOW MARKETS WORK FIGURE 5 Ben’s Supply Schedule and Supply Curve The supply schedule shows the quantity supplied at each price. This supply curve, which graphs the supply schedule, shows how the quantity supplied of the good changes as its price varies. Because a higher price increases the quantity supplied, the supply curve slopes upward. Price of Ice-Cream Cone Quantity of Cones Supplied $0.00 0.50 1.00 1.50 2.00 2.50 3.00 0 0 1 2 3 4 5 Price of Ice-Cream Cone $3.00 2.50 1. An increase in price ... 2.00 1.50 1.00 0.50 0 supply schedule a table that shows the relationship between the price of a good and the quantity supplied supply curve a graph of the relationship between the price of a good and the quantity supplied 1 2 3 4 5 6 7 8 9 10 11 12 Quantity of Ice-Cream Cones 2. ... increases quantity of cones supplied. The table in Figure 5 shows the quantity supplied by Ben, an ice-cream seller, at various prices of ice cream. At a price below $1.00, Ben does not supply any ice cream at all. As the price rises, he supplies a greater and greater quantity. This is the supply schedule, a table that shows the relationship between the price of a good and the quantity supplied, holding constant everything else that influences how much producers of the good want to sell. The graph in Figure 5 uses the numbers from the table to illustrate the law of supply. The curve relating price and quantity supplied is called the supply curve. The supply curve slopes upward because, other things equal, a higher price means a greater quantity supplied. Market Supply versus Individual Supply Just as market demand is the sum of the demands of all buyers, market supply is the sum of the supplies of all sellers. The table in Figure 6 shows the supply schedules for two ice-cream producers—Ben and Jerry. At any price, Ben’s supply schedule tells us the quantity of ice cream Ben supplies, and Jerry’s supply schedule tells us the quantity of ice cream Jerry supplies. The market supply is the sum of the two individual supplies.