Supply Function in Math

In the business world it is also known about the law of supply, that is, if the price of an item rises then the quantity of goods offered also increases, otherwise if the price of the goods falls then the supply of the goods also falls.

Mathematically, the price of goods is also a function of supply. The simplest bidding function is the linear offering function with the general form of the bid function as follows:

Formula of Supply Function in Math

P = Po + mx

Information :
P = Unit price per unit
Po = Lowest item price when x = 0 (Po > 0)
x = Number of goods (x > 0)
m = function gradient with a always positive value (m > 0)
The supply curve always lies in quadrant I and rises from left to bottom right.

Example of Supply Function

In a law of supply of goods obtained data: if the price of goods $900 per unit then the number of goods offered 20 units, and if the price of goods $1,200 per unit then the number of goods offered 50 units. Determine the formula of the bid function!

Answer:

For p = 900 and x = 20 the equation is obtained: 900 = Po + 20m
For p = 1,200 and x = 50 we get the equation: 1,200 = Po + 50m

From equation 1 and 2 if Po is eliminated, then it is obtained:

Substitute the value m = 10 to equation 1, then it is obtained:
900 = Po + 20m
900 = Po + 20(10)
900 = Po + 200
900 - 200 = Po + 200 - 200
700 = Po

So the supply function is P = 10x + 700.

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