ECF 100: Introduction to Microeconomics - Unit 5 (b) Supply

Vocabulary flashcards covering the definitions and determinants of supply, movements versus shifts, and the supply function based on Microeconomics Unit 5(b) lecture notes.

Supply

The amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices during a specific period, other things equal.

Law of Supply

The principle that, other things equal, an increase in a product's price will increase the quantity of it supplied; and conversely for a decrease in price, indicating a positive or direct relationship.

Ceteris paribus

The "other things equal" assumption used to focus on the effect between a product's own price and its quantity supplied.

Supply Schedule

A table showing the total quantity of a good or service that producers wish to supply at each price.

Supply Curve

A graph showing the total quantity of a good or service that producers wish to supply at each price, often reflecting that the number of firms willing to supply increases as market price increases.

Input Price

The cost of resources such as machines and labour used in production; the supply of a good is negatively related to the cost of these items.

Technology (as a determinant)

The method for turning inputs into a good or service; improvements reduce costs and raise the supply of a product.

Substitute Goods (in Supply)

Two goods where an increase in the price of one leads to a decrease in the supply for the other (e.g., Fanta and Mirinda).

Complement Goods (in Supply)

Two goods where an increase in the price of one leads to an increase in the supply for the other (e.g., Cars and Fuel).

Expectations

The anticipated future price of a good; if a producer expects prices to rise in the future, they may store current production and supply less to the market today.

Number of Sellers

A determinant of supply where a larger number of suppliers results in a greater market supply.

Taxes

Costs treated as business expenses; an increase in sales or property taxes increases production costs and reduces supply.

Subsidies

Referred to as "taxes in reverse," these occur when the government lowers producers' costs, thereby increasing supply.

Shift in Supply Curve

Changes caused by any of the factors that affect supply other than the commodity's own price; shifts to the right-downwards indicate an increase, while shifts left-upwards reflect a decrease.

Movement along the Supply Curve

A change in the quantity supplied brought about specifically by a change in the own price of a commodity, ceteris paribus.

Supply Function

A generalisation specifying the relationship between quantity supplied and multiple independent variables: $Q_{dx} = f(P_x, P_y, P_w, T, N, E, T_s)$.

Market Supply

The sum of the individual producers' supply for a specific product within a market.