Supply

Supply

Supply

The quantity of a goods or services that firms are able and willing to sell at any given price, per time period. One non-price determinant of supply is changes in technology

Law of supply

As the price of a good increases the quantity supplied also increases. There is a positive relationship.

Marginal costs

Refers to the cost of producing an additional unit of output

Market supply

The sum of all individual supply of producers at each price level for a given product

Non price determinants of supple

• Changes in costs of factors of production

• Prices of related goods

• Indirect taxes or subsidies

• Future price expectations

• Changes in technology

• Number of firms

Competitive supply

The output of one product prevents or limits the production of alternative products due to competing resources. Producers have limited resources like land and labor

Joint supply

An increase in the production of one product automatically increases the supply of atleast another (joint) product. For example, cows, milk and leather

Expansion

Price increases

Contraction

Price decreases

Law of diminishing marginal returns

Describes how output is affected when a firm uses more variable inputs while maintaining at least one factor of production fixed in the short run