Topic 8: Supply

• Theory of Supply: The desire to provide a particular product backed by the ability to do so at various price levels over a certain period of time.
• Definition of Supply: The number of units of goods a producer(s) is/are willing or able to provide at a particular price during a specific period of time.
• The only factor that affects quantity supplied (QS) is price which causes a movement up or down the supply curve.
• The supply curve slopes upwards from left to right depicting the law of supply.
• The curve may be linear or non-linear.
• Quantity Supplied: The quantity of goods supplied at a particular price during a specific period of time.
• Supply Curve: The relationship between price and quantity supplied.
• The supply schedule is a table that shows the relationship between the price of the good and the quantity supplied.
• The supply curve is a curve that shows the relationship between price and quantity supplied.
• The supply curve can be linear or non-linear.
• Subsidies are grants given to producers to reduce the cost of production, resulting in an increase in supply.
• If the price of a complement increases, more of it will be supplied and also more of the other good.
• The market supply curve is the horizontal summation of individual supply curves.
• If the price of a substitute increases, more of it will be supplied and less of the cheaper good.
• Changes in expectations about the future price and profit of a particular product will affect the producer’s decision to supply.
• An increase in the number of suppliers increases the number of goods supplied.
• An increase in tax increases the cost of production, resulting in producers producing and supplying less and vice versa.
• Improvement in technology increases efficiency and supply because production can be done faster, therefore increasing supply.
• Resources/Input cost determines supply because when the cost of input rises, supply will decrease and if the cost of input falls, supply will increase.
• The law of supply states that an increase in price results in an increase in quantity supplied and vice versa.
• The principle/law of supply states that there is a positive relationship between price and quantity supplied.