Why are individual market supply curves, such as the supply of accountants, upward sloping, or positively sloped in microeconomics?
While the first answer is not wrong, I feel that it ignores the more important causes of the upward sloping shape of the supply curve. For example, the texts I use to teach from give two major reasons why the supply curve slopes upward, neither of which is given in the first answer:
- The Law of Increasing Opportunity Cost. This says that the more you produce of a good, the more your opportunity costs are. This being so, you would need to receive a higher price to make it worthwhile to produce a larger number of goods.
- The Law of Diniminshing Marginal Returns. This says that when you supply more of a good, you need more variable inputs to make each additional unit of the good. This drives prices up.
So you can see that to simply say "people will work more for higher wages" is simplistic and does not account for more "economic" causes of the shape of the curve.
This is more a question of rational behavior of people who have taken up different professions like accountancy, etc. If each accountant is being offered more money to do the same work, an increased number of people will offer their services as an accountant.
And this is true of almost every profession. If the wages of janitors were to become equal to that of lawyers, I do not think there would be a shortage in the number of people who would want to become janitors, with even those who are presently lawyers willing to abandon their professions and become janitors.
An increase in price leads to an increase in supply.