What Happens When the Market Supply Curve Is Vertical?

A market supply curve is a line drawn on a graph that represents the supply of a particular good or service. It is often used in conjunction with a demand curve. The point at which the supply and demand curves meet is considered the equilibrium price, or the perfect price for supply and demand of that product. Supply curves are rarely vertical, but when they are, it represents a fixed quantity of supply on that product.

A market supply curve is represented on a graph where the price of a good runs vertically on the side of the graph and quantity runs horizontally. A supply curve usually runs upward to the right, which illustrates that when prices increase, manufacturers are willing to supply more of that good.

A demand curve is just the opposite. It generally runs upward to the left and illustrates that as prices decrease consumers demand more of that product. The equilibrium price is where the two lines intersect, and it represents the right price of the good so that supply and demand are equal.

A vertical market supply curve is illustrated by a line running up and down on the graph. When a market supply curve is vertical, it represents that the quantity of that good is fixed no matter what the price of the good is. A vertical curve illustrates a good that has zero elasticity. The good is always there, but no matter how much a person is willing to pay, extra amounts of that good cannot be created. Land is an example of a good with a vertical supply curve.

A supply curve that is nearly vertical is a more common occurrence than a vertical supply curve. This can be illustrated using a sporting event. If a major game is occurring, the number of tickets available, or the supply, cannot be increased. There are only a limited number of tickets available. The owners of the stadium must analyze what the demand for the tickets will be in order to sell them for the right price. If they sell them too cheap, they risk losing profits. If they place the price too high, they might not sell all the tickets. In this case though, the supply is slightly related to the demand.