Week 4 - Supply

Law of supply

other things being equal, the quantity supplied of a good rises when the price of a good rises

Willingness to accept

the lowest price a seller is willing to accept to sell an extra unit of a good; equivalent to the marginal cost of production 

Shifts in supply curve

price inputs, tech used to produce the good, number of sellers

Variable factor of production

input that can be changed in the short run, labour is considered to be a variable input, varies with output

Fixed factor of production

input that cannot be changed in the short run, capital is considered a fixed input, does not vary with output 

Marginal product of labour

the additional output that is generated from an additional unit of labour, equals the change in output divided by the change in labour

MPL

increases initially due to specialisation, decreases with successive addition of workers

Cost of production

how much a firm/producer/seller must pay for all its inputs