Chapter 3 pt.2 Flashcards
What is “Supply”
The maximum amount of a product that producers are willing and able to offer for sale
What is the Law of supply?
Higher prices leads producers to offer a larger quantity, if prices fall, producers will offer smaller quantity of products
What does a supply curve show
it shows the maximum amounts of a product a producer will make
What are the determinants of supply
1) production technology
2) costs of resources
3) prices of related commodities
4) expectations
5) number of sellers in market (producers)
6) taxes and subsides
When does a change in quantity supplied occur (moves along the line)
When the price of a product changes
What does it mean when a market is in “equilibrium”
The amount of the product that consumers are willing and able to purchase (demand) is matched exactly with the amount producers are willing and able to sell (supply)
What is a “surplus” and what is a “shortage”
A surplus is when supply is higher then demand, and a shortage is when the price is too low and we dont have enough supply
