What is supply?

Supply Supply – the amount of a product that would be offered for sale at all possible prices that could prevail in the market. Law of Supply – suppliers will normally offer more for sale at high prices and less at lower prices Supply involves only producers. It is important to remember that when looking at supply, you don’t think about actions of consumers.

Notice how when the price goes up, the quantity of product increases. Supply Schedule Much like a demand schedule, the supply schedule is a chart showing various quantities of a particular product supplied at all possible prices in a market. Notice how when the price goes up, the quantity of product increases.

Supply Curve Supply Curve – a graph showing the various quantities supplied at all possible prices that might prevail in the market. Normally a supply curve will have a positive slope which shows that when the price increases, the quantity of supply will increase. You will see a change in the quantity supplied by moving along the curve.

Many different factors can increase or decrease supply. Change in Supply Many different factors can increase or decrease supply. When supply is increased, the curve shifts right. When supply is decreased, the curve shifts left. The supply curve never shifts up or down. Many different factors can change supply.

Factors causing change in supply Cost of Resources Productivity Technology Taxes and Subsidies Expectations Government Regulations Number of Sellers

3 Types of Supply Elasticity Elasticity of Supply 3 Types of Supply Elasticity Elastic – A change in price causes a change in the quantity supplied that is more than proportional Inelastic – A change in price causes a change in the quantity supplied that is less than proportional Unit Elastic – A change in price causes a change in the quantity supplied that is proportional

Elasticity of Supply If a company can change production easily and quickly with a change in price it is likely to be elastic.