Supply

Supply

is the amount of a good or service that is available

Law of Supply

producers offer more of a good or service as its price increases and less as its price falls

Quantity Supplied

how much of a good or service a producer is willing and able to sell at a specific price

if price goes up

quantity supplied goes up

if price goes down

quantity supplied down

The Effect of Price on Production

Drive for profit , diver for production

• When the price goes up, the supplier recognizes the chance to make more money.

• When the price falls, the same supplier is discouraged from producing as much as before.

The Effect of Price on the Number of Suppliers

Free markets are open to new suppliers and when the price of something goes up, more producers will enter the market. Price goes down, producers will exit the market.

Understanding Supply Schedules

Shows the relationship between price and quantity supplied for a specific good or service or how much of a good or service a supplier will offer at various prices

Variables or factor that can change: price and supply

THE SUPPLY LINE

Supply explains the relationship between price and quantity supplied at every single price point

POINTS ON THE LINE

Quantity supplied is driven by price alone and is how much a producer makes at that particular price.

Market Supply Schedule

The longer amount of time a firm has to respond to a change in price, the more elastic something is.

• Ex: if you can quickly change how much you produce, your good is elastic

The Supply Graph

The supply curve is a graphic represents of a supply schedule. Horizontal axis now measures quantity of the good supplies

Market supply curve

graph of the total quantity supplied of a good or service by all supplies at various prices.

What is the difference between supply and quantity supplied?

The quantity supplied is the amount of an item or service that a producer is willing and able to manufacture or sell at a given price, whereas supply is the amount of an item or service that is available.

What would be the variables on a supply schedule/graph for a performer on tour.  What would go on the X and Y axes?

Price and quantity are the variables on the supply graph. The Y-axis represents the Performance Fee (Price), whereas the X-axis represents the Number of Shows (Quantity).

Increasing marginal returns

For every additional unit I produce, I get slightly more out of the one before keep making more

Diminishing marginal returns

for every additional unit I produce, I get slightly less out of the one before

Fixed costs

cost that does not change, no matter how much of a good is produced.

• building ren , equipment, property taxes, repairs, salaries, etc.

Variable costs

cost that rose and fall depending on the quantity produced

• hourly wages, raw materials, utilities

Total cost

all the cost combined (Fixed and Variable)

Marginal Cost

cost of producing each additional unit

Subsidy

A government payment that supports a business or market

Ex: Us govt pays farmers to not grow grain in order to keep prices higher

Government regulations

government intervention in a market that affects the price, quantity, or quality of a good, Some aims to ensure the safety of products.

• Impact price, quantity or quality products

Non-Price Determinants of Supply (change in global economy)

 A large and rising share of goods and services consumed by Americans is imported, imported goods are affected by conditions in other countries.

expectations

 If prices are expected to rise in the future, supply will fall in the short term. If prices are expected to fall, supply will rise.

change in number of producers

 If more suppliers enter a market to produce a certain good ,the market supply of the good will rise and the supply curve will shift to the right.

Lower Production Costs

Businesses may produce items more effectively thanks to new technology, which lowers the marginal cost of manufacturing.

Higher Production

With the technology, businesses may generate more output using the same or fewer inputs (labor, raw materials).

How do subsidies generally affect the supply curve?  Why?

 Government financial aid to manufacturers, or subsidies, lowers production costs. Higher production volumes at all price points result from their effective rise in the revenue producers obtain (price & subsidy) in relation to their costs

What would be the impact on the supply curve of oil if a major oil-producing country banned all exports to the US? 

A ban directly causes the oil supply curve to move to the left since there is less oil available in the US market. The immediate result is a reduction in supply, which raises the price of oil and lowers the overall amount available in the United States.