1. IB economics Microeconomics
SuppLy

2. Supply
Willingness and ability of producers to produce a quantity of a good or services at each price level in a given time period

3. The law of supply
As the price of a product rises, the quantity supplied of the product will usually increase, ceteris paribus
Supply curve normally slopes upward

4. The non-price determinants of supply
The cost of factors of production:
costs go up - less supplied

5. The non-price determinants of supply

6. The non-price determinants of supply
The state of technology:
Tech improves and supply increases
The price of other products, which the producer could produce instead of the existing product:
producers have a choice of what to produce
Expectations
future prices
Government intervention
Indirect taxes
subsidies

8. Distinction between movement on a curve and a shift of the curve
A change in the price of the good itself leads to a movement along the existing supply curve.
Price change
Change in any other determinants of supply will always lead to a shift of the supply curve to the right or left.
Quantity change

9. Linear demand and supply functions (HL)
Qd=a-bP
Qd=quantity demanded
a- quantity supplied if the price was zero
P- price
b- sets the slope of the curve
Qs= c+dP
Qs- quantity supplied
C- quantity supplied if the price was zero
D- sets the slope of the curve

10. Market Equilibrium
A state of rest, self-perpetuating in absence of any outside disturbance
Qs=Qd
No shortages/no surpluses
Everything produced in the market will be sold
Unless there is outside disturbance

11. Role of price mechanism
Allocate resources
Excess demand – prices rise slowly- SIGNALING ROLE
Higher price- produce more – INCENTIVE ROLE
More production – more resources allocated