positively sloped vs negatively sloped

CFA Level I
#1

In plain English, can you please explain positively sloped vs negatively sloped ?

For example, when they say:

in a decreasing-cost industry, the long-run supply curve will most likely be positively sloped.

Thanks

#2

decreasing cost industry - most likely supply will increase … so positively sloped.

look at the slope of # of items sold vs. time … # of items sold will INCREASE over time … (positive slope)

#3

With all due respect, a supply curve does not depict quantity vs. time; it depicts quantity vs. _ price _.

In a positively sloped supply curve, quantity supplied _ increases _ as price increases.

In a negatively sloped supply curve, quantity supplied _ decreases _ as price increases.

By the way, do not confuse price with cost. Cost is what the supplier pays (for raw materials, labor, utilities, and so on); _ price _ is what the supplier charges its customers.

#4

thanks both cpk123 and S2000Magician .

Are there terms (vacabulary) when:

Quantity supplied _ increases _ as price also _ decreases _.

OR quantity supplied _ decreases _ as price also _ decreases _ .

#5

My pleasure.

This is a negatively sloped supply curve.

This is a positively sloped supply curve; saying that quantity decreases when price decreases is the same as saying that quantity _ increases _ when price _ increases _.

#6

You may find it easier to draw the graph rather than understandin/remembering based on words. Under exam conditions, there’s a chance to make mistakes on increase vs decrease…

#7

This is totally WRONG.

In a decreasing-cost industry, the long-run supply curve will become negatively sloped. Negatively sloped supply curve means that producers will be able to produce more goods even for lower prices, that’s why is called decreasing-cost industry. As raw materials prices are expected to decrease over time, and assuming a competitive market, producers will be able to sell their products at lower prices.

A real example for this is the USB products, as new technologies appeared and efficiencies achieved in the industry, USB gadgets started at a price of 500$ the 1mb storage device in 1990 to 20$ the 64gb storage device today in the morning.