Supply

• Supply


  The quantity supplied is the amount of a good that sellers are willing and able to sell at a particular time for a particular price
• Law of Supply


  • Other things being equal, the quantity supplied of a good rises when the price of the good rises
• Supply Schedule

  A table that shows the relationship between the price of a good and the quantity supplied
• Supply Curve


  A graphical representation of the relationship between the price of a good and the quantity supplied
• Price increases


  Quantity supplied increases
• Movement along the supply curve


  Caused by a change in the price of the product itself
• Determinants of Supply


  • Input prices
  • Technology
• Input prices increase


  Supply decreases
• Input prices decrease


  Supply increases
• Technology improves

  Supply increases
• Supply


  Firms supply more cars because the cost of aluminum has gone down, so input prices affect production cost - if production cost goes down, supply goes up
• Technology


  • Makes work go faster, allows you to be more productive and efficient, so improvements in technology cause supply to increase
• Expectations


  If expectations are favorable, supply goes up (e.g. good weather forecast); if expectations are unfavorable, supply goes down (e.g. hurricane forecast)
• Number of sellers

  If the number of sellers increases, supply increases; if the number of sellers decreases, supply decreases
• Change in supply


  Shift in the supply curve - to the right indicates an increase in supply, to the left indicates a decrease in supply
• Determinants of supply

  • Price of the good itself
  • Price of factors of production (input prices)
  • Improvements in technology
  • Taxes and subsidies
  • Number of sellers
  • Prices of other goods
  • Weather
• Improvements in technology and lower factor prices cause a shift to the right (increase) in the supply curve
• The next topic is market equilibrium, where demand and supply are brought together