Microeconomics

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Author:
damea134
ID:
227165
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Microeconomics
Updated:
2013-07-15 13:32:38
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Chapter Supply
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Miller
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  1. Supply
    A schedule showing the relationship between price and quantity supplied for a specified period of time, other things being equal.

    The supply of any good or service is the amount that firms will produce and offer for sale under certain conditions during a specified time period.
  2. The Law of Supply
    The observation that the higher the price of a good, the more of that good sellers will make available over a specified time period, other things being equal

    At higher prices, a larger quantity will generally be supplied than at lower prices, all other things held constant. At lower prices, a smaller quantity will generally be supplied than at higher prices, all other things held constant.

    Positive relationship between price and supply
  3. Supply Schedule
    a set of planned production rates that depends on the price of the product.
  4. Supply curve
    The graphical representation of the supply schedule; a line (curve) showing the supply schedule, which generally slopes upward (has a positive slope), other things being equal.
  5. Market Supply Curve
    We sum the individual producers’ supply curves to obtain the market supply curve. (The sum of all producers)
  6. Shifts in Supply
    • If something besides price changes and alters the willingness of suppliers to produce a good or service, we will see the entire supply curve shift.
    •  
    • 1. prices of resources (inputs) used to produce the product,

    2. technology and productivity,

    3. taxes and subsidies,

    4. producers’price expectations,

    5. and the number of firms in the industry.
  7. COST OF INPUTS USED TO PRODUCE THE PRODUCT
    If one or more input prices fall,production costs fall, and the supply curve will shift outward to the right; that is, more will be supplied at each and every price. The opposite will be true if one or more inputs become more expensive.
  8. TECHNOLOGY AND PRODUCTIVITY
    When the available production techniques change, the supply curve will shift.
  9. TAXES AND SUBSIDIES
    Certain taxes, such as a per-unit tax, are effectively an addition to production costs and therefore reduce the supply. A per-unit subsidy would do the opposite.
  10. PRICE EXPECTATIONS
    A change in the expectation of a future relative price of a product can affect a producer’s current willingness to supply, just as price expectations affect a consumer’s current willingness to purchase.
  11. NUMBER OF FIRMS IN THE INDUSTRY
    If the number of firms increases, supply will increase, and the supply curve will shift outward to the right. If the number of firms decreases, supply will decrease, and the supply curve will shift inward to the left.
  12. Subsidy
    A negative tax; a payment to a producer from the government, usually in the form of a cash grant per unit.
  13. Changes in Quantity Supplied
    A change in price leads to a change in the quantity supplied, other things being constant. This is a movement along the curve.

    A change, or shift, in supply is a movement of the entire curve.
  14. Changes in Supply
    A change in any ceteris paribus condition for supply leads to a change in supply.This causes a shift of the curve.

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