The supply curve says that as prices go up, more suppliers can and will have an incentive to produce and sell a product. As prices go down, the fewer suppliers can produce a product at that price, and the less incentive they have to do so.
Let’s think about oil as an example. Oil is cheap to get out of the ground in places like Saudi Arabia, at about $2 a barrel. In other places like Alaska, it costs $10 to $15 a barrel. In other places like the Gulf of Mexico, it may cost $25 a barrel.
So as prices go down, fewer producers can produce the product at that price, and they stop producing. This reduces supply and makes the price go up again. As the price goes up, producers start producing again. As supply goes up, the price comes down.
How has this supply curve been in action in your business?
Aluminum just went up another 18%. Glad to be living life. How about you folks?
I know there are many important businesses that influence our daily life but one that comes to my mind is a farming business. The reason is simple. I like and need to eat.
I like fresh local produce and fruits. I never reach for the frozen kind or pre-made foods at the stores because it really does not take long to clean and chop up some vegetables and make a healthy meal. The texture and taste is so much better compared to the frozen or canned variety. Also, it is more nutritious with no additives, preservatives, taste enhancers, and whatever other added ingredients the label mentions.
I love local organic produce. From roots to leafs you name it and I eat it. Raw or saute.
Roots – turnip cabbage, radishes, carrots, beets, onion, garlic – they are all very yummy
Leafy Greens – Kale, turnip cabbage greens, collard greens
Fruits – tomatoes, apples, grapes, peppers, cucumbers
My all time absolute favorite is fresh cut watermelon.
So curve or no curve, whoever grows vegetables I want you to know that I love your produce.