3.8 : Impact of Number of Sellers on Supply Curve

The number of sellers refers to the total count of businesses or individuals engaged in producing or supplying a specific commodity or service within a market.

Consider a market for handmade candles. If more sellers enter this market, perhaps attracted by high profit margins, the total quantity of candles supplied will increase. Each new seller contributes to the total supply, resulting in a rightward shift of the market supply curve. This shift represents an increase in supply due to the entry of new sellers, all else being equal.

On the contrary, if some sellers leave the market due to low profits or better opportunities elsewhere, the quantity of candles supplied will decrease. With each seller exiting, the supply decreases, resulting in a leftward shift of the supply curve.

Understanding these shifts and their underlying causes is crucial for businesses to know the essentials of the market and make informed decisions. These changes in the number of sellers directly influence pricing strategies, production decisions, and the eventual market equilibrium.