The supply curve slopes upward because the volume suppliers in an industry are willing to produce increases as the price the market pays increases. Under typical circumstances, the revenue and profit derived by a supplier increases as the market price rises.Know More
On a supply cover, the vertical axis shows various price points for the product or industry being depicted. The horizontal axis represents the relative quantity of goods suppliers will produce. To demonstrate the law of supply, a person must increase the supply volume while increasing the price. This requirement dictates that the slope curves upward.
Producers in a given industry must compare the opportunity cost of supplying one good against the opportunity cost of supply another. If the market price for one good is relatively small compared to the market price of another good at a similar output, the producer will opt to supply more of the first good. If the price of "widget A" goes up from $5 to $7, while "widget B" remains at $5, the producer has increased incentive to offer more of "widget A" to the market.This incentive is depicted as an upward-sloping curve.
Another reason producers supply more goods as prices increase is that margins are typically better at higher prices.Learn more about Economics
The aggregate demand curve, which illustrates the total amount of goods and services demanded in the economy at a given price level, slopes downward because of the wealth effect, the interest rate effect and the net exports effect, according to CliffsNotes.com. The curve measures the price level on the vertical axis and gross domestic product (GDP) on the horizontal axis.Full Answer >
The downward slope of a demand curve is due to consumers being less willing to purchase expensive products. As the price increases, potential consumers are likely to buy competing products. They may also refrain from purchasing a similar product.Full Answer >
The higher the price of a firm’s products, the more of them the firm will want to produce to maximize its revenues; as a result, its supply curve is upward-sloping, Investopedia explains. The demand curve has the opposite slope: the higher a product’s price, the less of it consumers demand.Full Answer >
The slope and elasticity of a linear demand curve are extremely closely linked, but where the slope itself is just a measure of how much demand changes given a change in price, elasticity is a description of what that slope means. Elasticity relates slope to the profitability of price changes.Full Answer >