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Published byEugene Phelps Modified over 9 years ago
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the amount of goods/services that producers are willing and able to supply at a given price. Supply: the amount of goods/services that producers are willing and able to supply at a given price. Market supply is combined result of the decisions of all individual suppliers.
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The price of tomatoes Higher the price = greater quantity. The prices of alternative products Production depends on prices of alternative products (outputs). Which vegetables to grow? Eg. price of cauliflowers increases – more cauliflowers and fewer tomatoes.
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Prices of factors of production and other inputs Quantity supplied depends on costs of production. Eg. cost of labour, fertiliser, machinery increases - smaller quantity of tomatoes will be supplied at each price than before. Expected future prices Farmers influenced by future expectations Eg. higher expected future prices – increased supply of tomatoes.
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The state of technology New technologies - lower costs - increase in quantity supplied at each price.
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Qs = f(Px, Pg, Pf, Pe, Ty, N, …) Qs Qs = quantity of tomatoes supplied Px Px = price of tomatoes Pg Pg = prices of alternative outputs Pf Pf = prices of factors of production and other inputs Pe Pe = expected future prices of tomatoes Ty Ty = technology N N = number of firms supplying the product
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