Explain how supply schedules and supply curves can help businesses make production decisions.

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Posted on (Answer #1)

Supply schedules and supply curves can help businesses to make production decisions because they show firms how much they can afford to produce at any given price level. 

A supply schedule is simply the set of numbers that creates the supply curve.  It is a set of coordinates showing a price level and a corresponding level of output.  This tells a firm how much it can produce at a given price.  This is important for the firm.

When the firm looks at the supply schedule and the curve that comes from it, it can see how much it should produce.  The firm can presumably know what the price for its products is.  When it sees how much it can sell its product for, it simply goes to the supply schedule to see how many units it can make at that price.  In this way, the supply curve and schedule tell the firm how much of its product to make at any given price.

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