C5S1 Review

Supply

How much of a product is offered for sale (producer controlled)

Law of Supply

Principle that more product will be offered for sale at higher prices than at a lower price (supply has direct relationship with price)

Market Schedule / Graph

Interpreted same as demand, graph slopes upwards

Change in Quantity Supplied

Change in price = movement along the curve (or change in quantity supplied). Movement is caused by a change in a demand determinant (ex. number of consumers, consumer taste, etc)

Change in Supply

A situation where suppliers offer different amounts of products for sale at all possible prices (change in supply determinant)

Determinants of Supply

Does the determinant make it easier or harder to supply? (yes, right shift | no, left shift)

Cost of resources, productivity, technology, taxes, expectations, government regulations, government subsidies, number of sellers

Cost of Resources

Cost of resources increases (left) or decreases (right)

Productivity

Management trains workers well or decide to work harder or more efficiently (right)

Untrained or unmotivated workers (left)

Technology

New technology that increases production or efficiency (right)

Taxes

Taxes increase (left), taxes decrease (right)

Expectations

If producers expect price to increase for a product in the future they will make plans to produce more, which will eventually bring more product to the market (right)

Government Regulations

Increased regulation = more expensive production costs (left)

Government Subsidies

Less subsidies, less supply

More subsidies, more supply

Subsidies

A government payment to make products cheaper overall

Number of Sellers

More firms = more supply (right)

Supply Elasticity

Time is the only factor.

Can the supplier quickly bring the product to the marketplace? (can it be produced quickly)

Yes, elastic

No, inelastic

Inelastic Characteristics

Specialized workforce

Specialized manufacturing equipment

Shipping issues

Supply issues

Elastic Characteristics

Adapt quickly to change

Ready made inputs

Highly mechanized assembly

Easy to adjust workforce