Chapter 21

Supply Various quantities of a good or service that producers are willing to sell at all possible market prices Opposite of demand Supplies offer different quantities of a product depending on price buyers are willing to pay Law of Supply Varies by price Price for goods rise/ quantity supplied increases Price for goods fall/ quantity supplied decreases

Supply Individual supply curve Profit motive Slopes upward Willing to offer more goods at higher prices Profit motive Time, money, capital, labor Businesses want to cover the cost of their production If they do not cover costs then it’s a marginal loss If they do then its profit

Changes in Supply Can increase or decrease Supply increases > the curve moves to the left Supply decreases> the curve moves to the right Changes in cost of resources Changes affect supply Productivity Degree to which resources are being used effectively

Changes in Supply Technology Government Policy Taxes Elasticity Speeds up ways of doing things Cuts a businesses costs Government Policy Minimum wages Tighter government regulations restrict supply Taxes Higher taxes= higher costs Subsidy- government payment to an individual Elasticity Measure of how the quantity supplied of a good changes in response to changes in price