MODULE 6 Flashcards
(9 cards)
The supply curve only depicts the relationship between price and quantity supplied. A change in either is a movement along the curve.
The supply schedule shows how the quantity supplied depends on the price. The supply curve illustrates this relationship. 
Supply curves are normally upward sloping: at a higher price, producers are willing to supply more of a good or service
A change in price results in a movement along the supply curve, and a change in the quantity supplied
Increases or decreases in supply lead to shifts of the supply curve. An increase in supply is a right work shift: the quantity supplied rises for any given price. A decrease in supply is a leftward shift: the quantity supply falls for any given price.
The five main factors that can shift the supply curve or changes in: 
1) input prices 2) prices of related goods or services 3) technology 4) expectations 5) number of producers 
The market supply curve is the horizontal sum of the individual supply curves of all producers in the market
Price in a competitive market moves to the equilibrium price, or market clearing price, where the quantity supplied is equal to the quantity demanded. This quantity is the equilibrium quantity. 
All sales and purchases in a competitive market, take place at the same price. If the price is above its equilibrium level, there is a surplus that drives the price down to the equilibrium level. If the price is below its equilibrium level, there is a shortage that drives the price up to the equilibrium level. 
