Chapter 7

• Law of Supply: as supply increases, so does the price (and vice versa) since supply and price have a direct relationship. This is because there will be more price to fund the supply or more price from demand to fund supply to counteract the demand.
• Factors that affect supply are very similar to factors that affect demand
• What curve is this?

  The supply curve

  
• Supply: The willingness and ability of producers to provide a quantity of good/service at various price levels at a given time.
• Expansions and contractions in the supply curve is caused due to higher price, since:

  1. Higher prices can mean lower demand
  2. Higher prices can fund a higher amount of supply being produced.
• Factors that increase/decrease supply:

  1. Changes in complementary and supplementary goods
  2. Changes in technology for capitol equipment
  3. Fall/rise in the cost factors for production
  4. Increase/decrease in the availability/quantity of resources
  5. Favourability of climate conditions/weather patterns to the supply-making procedure
• Perfectly elastic supply


  *same for demand

  
• Perfectly inelastic supply


  *Same for demand

  
• Outlay refers to the total amount of revenue gained from sold goods and services
• Factors affecting supply:

  • time lags after a price change
  • Ability to hold and store stock
  • Excess capacity