Supply Chapter 5

An Introduction to Supply  Supply – schedule of quantities that are offered for sale at each and every price  What suppliers will supply  Anyone offering products to sell is a supplier  A person looking for a job is supplying their labor

Supply and the Supply Schedule  Supply schedule – data in a table format  Supply curve – data on a graph  Curve is opposite of demand  Law of Supply  Quantity supplied varies directly with its price  Change in Quantity Supplied  Quantity supplied – amount producers bring to market at one price  Change in quantity supplied – change in amount offered in response to a price change  Movement along the supply curve

Change in Supply  Producers offer different amounts of products at every price level  Shift in the supply curve  Reasons:  Cost of Inputs  Productivity  Technology  Number of Sellers  Taxes and Subsidies  Expectations – anticipation of future events  Government Regulations

Elasticity of Supply  Small change in price = large change in quantity supplied – elastic  Big change in price = small change in quantity supplied – inelastic  Proportional changes – unit elastic

Elasticity of Supply  Determinants of Supply Elasticity  Products requiring large amounts of capital to produce are generally inelastic  Crude oil  Products needing smaller amounts of capital are elastic  Candy, kites  Comparing Demand and Supply Elasticity  Very similar