A curve showing the relations hip between the price of a good and its supply. It is usually drawn as in the diagram opposite, embodying the hypothesis that the higher the price is, the greater the supply. The steepness of the curve reflects the extent to which producers of the good respond to an increase in price by increasing supply. It will depend on whatever expafision of output it is profitable to make given a price increase, and thus depends on the underlying costs of production. The position of the curve will change if there is a change in the underlying costs of productioh; if prices of factors of production change, for example, as a result of which the technology of production changes, or if factors of production which previously were available to the firrn in a fixed quantity become capable of being varied in quantity. The analysis of the underlying determinants of the supply curve is the major purpose of the theory of the firm.
Reference: The Penguin Dictionary of Economics, 3rd edt.