chapter 3: supply side

quantity supplied

the amount ofa good or sevice that a firm is willing and able to supply at a given price

supply schedule

a table that shows the realtionship between the price od a product and the quantity of the product supplied

supply curve

a curve that shows the realtionship between the price of a product and the quantity of the product supplied

law of supply

the rule that holding everything else constanst, increases in price causes increase in the quantity supplied and decreases in price decreases in the quantity supplied

variables that shift the market supply

price of inputs, tech change, prices of substitutles in production, number of firms in the market, expected future prices

price of inputs

a change in the price of an input, anyhting used in the productuon of a good or serveice, is the most likeley factor to cause the supply curve to shift

tech change

a positive or negative change in hte ability of a firm to produce a given level of output with a given quantity of inputs

prices of substitutes in production

alternative products that a firm could produce, cocacola will produce more premium water if the market price of cola decreases

number of firms in the market

a change in the number of firms the market will change supply

expected future prices

if a firm expects that the price of its product eill be higher in the future than it is today, it has the incentive to decrease supply now and increase it in the future

market equalibrium

a situation where the quantity demanded equals the quantity supplied

compertative market equalibrium

a market equalibrium with many buyer and sellers

surplus

a situation in which the quantity supplied is greater than the quantity demanded (excess supply)

shortage

a situation in which the quantity demanded is greater than the quantity supplied