The supply schedule is the relationship between the quantity of goods supplied by the producers of a good and the current market price. It is graphically represented by the supply curve. It is commonly represented as directly proportional to price. The positive slope in short-run analysis can reflect the law of diminishing marginal returns , which states that beyond some level of output, additional units of output require larger doses of the variable input. In the long run (such that plant size or number of firms is variable), a positively-sloped supply curve can reflect diseconomies of scale or fixity of specialized resources (such as farm land or skilled labor).

For a given firm in a perfectly competitive industry , if it is more profitable to produce at all, profit is maximized by producing to where price is equal to the producer's marginal cost curve. Thus, the supply curve for the entire market can be expressed as the sum of the marginal cost curves of the individual producers.

Occasionally, supply curves do not slope upwards. A well known example is the backward bending supply curve of labour . Generally, as a worker's wage increases, he is willing to supply a greater amount of labor (working more hours), since the higher wage increases the marginal utility of working (and increases the opportunity cost of not working). But when the wage reaches an extremely high amount, the laborer may experience the law of diminishing marginal utility in relation to his salary. The large amount of money he is making will make further money of little value to him. Thus, he will work less and less as the wage increases, choosing instead to spend his time in leisure. The backwards-bending supply curve has also been observed in non-labor markets, including the market for oil: after the skyrocketing price of oil caused by the 1973 oil crisis , many oil-exporting countries decreased their production of oil.

The supply curve for utility production companies is nontraditional. A large portion of their total costs are in the form of fixed costs. The marginal cost (supply curve) for these firms is often depicted as a constant.