This program illustrates the concept of supply. Generally, the amount of goods the sellers offer to the market increases as the price of these goods rises (this relationship is known as the law of supply). This fact explains the positive slope of supply function. |
Supply is also affected by some factors that are unrelated to price. For example, a decrease in taxation results in growth of market supply.
Graphically, the influence of factors that are not related to price also can be extrapolated from the supply curve. Usually, four non-price factors are taken into consideration: technology level, prices of resources, taxes, and amount of consumers.
The price is plotted along the vertical axis and the quantity of goods is plotted along the horizontal axis. Modify non-price factors and alter the amount of supply by moving the point of supply along the supply curve, and observe the ensuing changes.