1. How Markets Work Supply

2. If firm supplies a good or a service, the firm: 1.Has the resources and technology to produce it, 2.Can make profit from producing it, and 3.Plan to produce & sell it.

3. The Quantity Supplied The quantity supplied of a good or a service is the amount that producers plan to sell during a given time period at a particular price.

4. The Law of Supply The law of supply states: Other things remaining the same, the higher the price, the greater is the quantity supplied; and the lower the price, the smaller is the quantity supplied. The reason for the positive relationship: When price rises, other things remaining the same, producers can bear higher costs by increasing the quantity supplied. Remember : Opportunity cost ( the cost of the last unit produced of the good measured by the decrease in the quantity of the other good ) increases as the production of the good increases.

5. Supply Schedule The supply schedule lists the quantity supplied at each price when all other things that affect producers’ planned sales remain the same. The supply curve shows the relationship between the quantity supplied of a good and its price when all other things that affect producers’ planned sales remain the same.

6. The Supply Schedule of Energy Bar The Quantity SuppliedPrice 00.5A 61B 101.5C 132D 152.5E

7. The Supply Curve of Energy Bar Price Quantity Supplied 0.5