What does a supply curve illustrate?

A supply curve illustrates the relationship between price and quantity supplied, which is fundamental in understanding market dynamics. As price increases, typically, the quantity of goods that producers are willing to offer for sale also increases. This positive relationship is crucial because it highlights how producers respond to changes in market conditions. The upward slope of the supply curve indicates that higher prices incentivize suppliers to increase output, reflecting the principle of supply in microeconomics.

Understanding this relationship allows economists and businesses to predict how changes in market conditions, such as shifts in demand, alterations in production costs, or other economic factors, can affect supply levels and pricing strategies. This graphical representation is central to market analyses and decision-making, making it an essential aspect of microeconomic principles.