LO2  Schedule or curve  Amount producers are willing and able to sell at a given price  Individual supply  Market supply 1Chapter 3, LO2©2013 McGraw-Hill Ryerson Ltd.

LO2  Other things equal, as the price rises, the quantity supplied rises and as the price falls, the quantity supplied falls.  Reason:  Price acts as an incentive to producers  At some point, costs will rise 2Chapter 3, LO2©2013 McGraw-Hill Ryerson Ltd.

LO Price (per bushel) Quantity supplied (bushels per week) S Supply of Corn Price per Bushel Q s per Week $ P Q 3Chapter 3, LO2©2013 McGraw-Hill Ryerson Ltd.

LO2 $ Price (per bushel) S1S1 Quantity supplied (thousands of bushels per week) P Q S2S2 S3S3 Increase in supply Decrease in supply 4Chapter 3, LO2©2013 McGraw-Hill Ryerson Ltd.

LO2 $ Price (per bushel) S1S1 Quantity supplied (thousands of bushels per week) P Q S2S2 S3S3 Change in Quantity Supplied Change in Supply 5Chapter 3, LO2©2013 McGraw-Hill Ryerson Ltd.

LO2  A change in resource prices  A change in technology  A change in the number of sellers  A change in taxes and subsidies  A change in prices of other goods  A change in producer expectations 6Chapter 3, LO2©2013 McGraw-Hill Ryerson Ltd.

LO2 3-7 DeterminantExamples Change in resource pricesA decrease in the price of microchips increases the supply of computers; an increase in the price of crude oil reduces the supply of gasoline. Change in technologyThe development of more effective wireless technology increases the supply of cell phones. Change in taxes and subsidiesAn increase in the excise tax on cigarettes reduces the supply of cigarettes; a decline in subsidies to state universities reduces the supply of higher education. Change in prices of other goodsAn increase in the price of cucumbers decreases the supply of watermelons. Change in producer expectationsAn expectation of a substantial rise in future log prices decreases the supply of logs today. Change in the number of suppliersAn increase in the number of tattoo parlors increases the supply of tattoos; the formation of women’s professional basketball leagues increases the supply of women’s professional basketball games.