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Price of Inputs
(Determinants of Supply)
Cost of labor, raw materials, utilities, fuel cost to deliver products
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Number of Providers in the Industry
(Determinants of Supply)
The more players, the more competition, lower prices
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Taxes
(Determinants of Supply)
Increase in taxes required to meet government regulation prompt price increases
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Technology
(Determinants of Supply)
Can improvements in the use of new or better technology increase productivity or reduce cost
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The Law of Diminishing Returns
A company can increase productivity to a point, but at the point, productivity begins to decrease
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Equilibrium Price
Where demand and supply curves cross on a graph
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Shortage
Quantity demanded is greater than quantity supplied
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Surplus
Supply available is greater than demand
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Rationing
Government mandated restriction on goods available
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Black Market
Illegal transaction (scalping tickets, drugs)
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Price Ceiling
Government imposed restriction on how high a price a product can be sold. Maximum
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Price Floor
- Government imposed restriction on how low a price can be sold.
- Minimum
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