Note: This is the third post in a weekly video series on basic microeconomics.
The supply curve seems like an easy enough concept to understand: it’s a graphic representation of the relationship between the quantity of product that a seller is willing and able to supply at a particular price. The implications for how this affects the supply of goods and services, though, is more profound than we often realize.
For example, as this video from Marginal Revolution University shows, the oil suppliers in Alaska and Saudi Arabia face different costs of extraction, affecting the price at which they are willing to supply oil—and affecting the price you pay at the gas pump.
(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)
Previous in series: How to understand the demand curve