Macroeconomics-Chapter 3

What is supply?

To understand supply, we use a supply curve. The supply

curve is a graphical representation of the relationship

between price and quantity supplied, supply schedule or supply curve

Quantity supplied

Amount producers are willing and able to

sell at a given price

Law of supply

Other things equal, as price falls, the quantity

supplied falls, and as price rises, the quantity

supplied rises

What explains the relationship between the price

and the quantity supplied?

Price acts as an incentive to producers, At some point, costs will rise

Supply Curve

Changes in supply

Differences in Changes in Supply vs change in quantity demanded

Changed in supply results in a shift of the supply curve, change in quantity supplied results in a move of a point on the supply curve

What causes a change of quantity supplied?

Price of Corn Flakes

What causes a change in supply?

Price of inputs, price of other/related goods, technology, mumber of sellers, and taxes and subsidies,