# Deriving the supply curve

In deriving the supply curve how does one create the supply curve like the one we see in textbooks (upward sloping, possible curve), if we are only given a single quantity and price at a moment in time? For example, in the oil industry we are told that the US is supplying x barrels of oil, how can we derive the rest of the curve since we don't know what the price is at x-y barrels...

• Supply curves are (almost) always upward sloping. To get the curve for a competitive industry you would need to know somehting like the cost or production function. – BB King Nov 14 '15 at 14:23

## 1 Answer

Cvarza, the supply curve is theoretically derived.

The supply curve of the industry is the horizontal sum of the curves of firms. The supply curve of a firm is the portion of the marginal cost curve with a positive slope. That is, firms act to equal marginal cost to marginal revenue. If the marginal cost is decreasing, that means the firm can increase (marginally) the production (and its profits) till the equilibrium point.

As reference, i recommend the chapter about firms supply in Varian's undergradute book. As a graduate reference, MasCollel is strongly recomended.