Econ: Supply


1 Supply-wordcloud

 

Supply, like demand, is another important concept. Supply is defined as the quantities of output that producers will bring to market at each and every price. Like demand, supply can be presented in the form of a supply schedule, or graphically as a supply curve. Individual producers have their own supply curves, and the market supply curve is the sum of individual supply curves.

The Law of Supply states that more output will be offered for sale at higher prices and less at lower prices. A change in quantity supplied is represented by a movement along the supply curve, whereas a change in supply is represented by a shift of the supply curve to the left or right.

Changes in supply, STORES, are caused by changes in: Subsidies or taxes – government regulations, Technology/productivity, Other conditions: natural disasters or related events, the cost of Resource inputs, producers Expectations, and the Size of the market. Supply elasticity describes how producers will change the quantity they supply in response to a change in price. A supply curve is the graph that shows the relationship between price and quantity supplied. A change in the quantity supplied is a result of a change in price.  A change in supply of a particular item shifts the entire supply curve to the left or right. When a business wants to expand, it has to consider the law of diminishing returns to decide how much expansion will help the business.


Homework:
1) Read Chapter 5.4-5.5 pp.82-87

Arrows-02-june

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