2.2 Supply

Supply

quantities of a good or service that producers are willing and

able to supply at different prices in a given time period

Law of supply

there is a positive (direct) relationship between quantity supplied and price, ceteris paribus

The law of diminishing marginal returns

after some optimal level of capacity is reached, adding an additional factor of production will result in smaller increases in output

Marginal costs

the additional cost in producing each additional unit

Non-price determinants of supply

Factors that will change the supply of a good/service, STORES:

[Subsidies & taxes, Technology, Other related goods, Resource costs, Expectations, Size of market]

Subsidies

a benefit given to an individual, business, or institution, usually by the government

Indirect tax

imposed on one person or group, like manufacturers, then shifted to a different payer, usually the consumer

Competitive supply

Goods that compete for the same resources

Joint Supply

When the production of one good also produces another good