Supply AnalyticsSupply curves only exist when there are markets for a good or service.

Markets can arise for various reasons including social and cultural considerations (Kosher Foods, Hockey Tickets), environmental conditions (Parkas, Canoes), traditional methods of celebrations (Christmas Trees, Menorah) and purposeful marketing activities (IPads, Apple Watches).

In each and every case a producer or a set of producers will earn income(make money) by producing or offering the good or service and will therefore give up other resources (usually money in order to overcome opportunity costs) in order to produce or otherwise make available that good or service.

Even though markets may exists in some parts of the world they need not exist in any other part of the world and they may not persist indefinitely.

Markets are unique for each and every point in time and space and always assume caeteris paribus (all other things are equal).

Therefore analytics are restricted by these considerations but are also unlimited in that they apply equally everywhere at all times.

Supply Curve

Business Surplus

The Supply Curve represents all possiblePrice and Quantity combinations that willsatisfy this market and generate a flow of income .

The Demand Curve is represented mathematically asPrice = Market Entry Point+ (Rate of Change in Price as Quantity Increases ) times Quantityand is a straight line. In symbols: Ps=MEP+Slope * QsBusiness Surplus is the area under the Supply Curve and is composed of the Producer Surplus and the Supplier Surplus.

Price P

Quantity Q

Market EntryPoint MEP

Supply Curve

Business Surplus=Total Revenue

Numerical Example.

The Supply Curve is represented mathematically asPrice Supplied= Market Entry Point+ (Rate of Change in Price as Quantity Increases ) times Quantityand is a straight line. In symbols: Ps=MEP+Slope * Qs. Business Surplus is composed of Producer Surplus (15-10)*5/2=12.5. Total Revenue= Business Surplus is 5*15=75 so the Supplier Surplus is 75-12.5=62.5.( Supplier Surplus=Business Surplus -Producer Surplus .)

Price P

Quantity Q

Market EntryPoint MEP

Application Extension: If P=15 what is the value of Qs?Ps=15=10+Qs=> Qs=15-10=5 therefore Qs=5.

10

15

5