LECTURE 3 - Thinking Like the Seller: Supply Flashcards
(10 cards)
define quantity supplied
the amount of a good that sellers are willing and able to sell.
price plays a massive role
define law of supply
the claim that, other being equal, the quantity supplied of a good rises when the price of a good rises
what is a supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
[insert graph]
what is a supply curve
a graph to show the relationship between the price of a good and the quantity supplied
what can shift the supply curve
- input prices
- technology
- expectation
- number of sellers
how does input prices shift the supply curve
to produce an output (product) sellers use various inputs. when the price of one or more inputs rises, producing the output becomes less profitable and therefore the firm decreases supply.
the supply of a good is negatively related to the price of the inputs
inputs denote ingredients, labour, machinery etc.
how does technology shift the supply curve
the invention of mechines reduce the amount of labour necessary. by reduicng firms costs, the advance in technology raise the supply of a good
how does expectation shift the supply curve
the amount of a good supplies may depend on its expectation about the future. if a firm expects the price of a good to rise in the future it will put some of its current production into storage and supply less in the market on that selling day
how does the number of sellers shift the supply curve
market supply depends on the number of sellers. if two sellers were to retire the supply in the market would fall.
