Problem 21 What is the difference between t... [FREE SOLUTION]

Chapter 3: Problem 21

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

Expert verified

The difference between supply and quantity supplied is that supply refers to the entire relationship between price and the quantities producers are willing to sell, while quantity supplied is the specific amount offered for sale at a particular price. Supply is represented by an upward sloping curve, while quantity supplied is a point on that curve. In a graph with the supply curve for milk, the whole upward sloping line represents the supply, and the specific point on the curve corresponding to a particular price (say P1) represents the quantity supplied (say Q1) at that price.

Step by step solution

Define Supply

Supply is the total amount of a product that producers are willing and able to offer for sale at different prices at a given period of time. In other words, the supply of a product shows the relationship between its price and the quantity supplied.

Define Quantity Supplied

Quantity supplied is the specific amount of a product that producers are willing and able to offer for sale at a particular price at a given period of time. It is the specific point on the supply curve that corresponds to a particular price.

Explain the Difference

The main difference between supply and quantity supplied is that supply represents the whole relationship between price and the quantities of a product that producers are willing to sell, whereas quantity supplied refers to the specific amount offered for sale at a particular price. Supply is represented by a curve, while the quantity supplied is a point on that curve.

Draw a Graph with the Supply Curve for Milk

To demonstrate the supply curve of milk and the difference between supply and quantity supplied, let's use the following steps: 1. Draw two axes: the vertical (Y-axis) representing the price of milk and the horizontal (X-axis) representing the quantity of milk. 2. Draw an upward sloping line, which is the supply curve for milk. This curve represents the various quantities of milk that producers are willing to sell at different prices. 3. Select a specific price, say P1, on the Y-axis. 4. Draw a horizontal line from the price P1 to the supply curve and then a vertical line down to the X-axis. The intersection point on the supply curve represents the quantity supplied at price P1, say Q1. Now, you can see that the whole upward sloping line is the supply of milk, showing the relationship between the price and the quantity supplied. The specific point (Q1) on the supply curve representing the quantity supplied at price P1 illustrates the difference between supply and quantity supplied.