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4. Market Supply
  A. Meaning
 
1.
 
The market supply of a good refers to the quantities that all sellers would sell at various possible prices per time period, ceteris paribus.
  2. It is the sum total of individual supplies in a given market.
 
  B. Derivation of a Market Supply Schedule / Curve
 

We can derive a market supply of a good by adding up the quantity supplied by each seller at each price.

For illustration, assume that there are inly two individual sellers (A and B) in a market:

 
 
Price of Good X ($)
Individual Supply
Market Supply (units)
A (units)
B (units)
5
4
3
2
1
6
5
3
2
1
10
8
6
4
2
16
13
9
6
3
Derivation of a market supply schedule
 
  By horizontal summation of individual supply curves, we may derive a market supply curve, as shown below:
 
 
Derivation of a market supply curve
 
Derivation of a market supply curve
 
 
  • At the price $4, the quantity supplied by B is 8, and that by A is 5. By "horizontal summation" , we can get the market supply curve which is 12.
  • In the same manner, we can find all other points to derive the market supply curve.
 
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