Economics - supply 2.2
determinants of supply
-costs of inputs (higher costs, less supply) -productivity (increased, increase supply) -technology (more technology, increase supply) -taxes on business (higher taxes, decreased supply) and subsidies (increased subsidies, increase supply) -government regulations (more, decrease) -expectations from sellers of rising costs or higher prices -number of sellers in the market
law of supply
-more goods and services supplied at higher prices than at lower prices -the price of a product is directly related to the quantity supplied, other things constant
change in quantity supplied
-movement along a supply curve -can only be caused by a change in the price of the good -increase in Qs is movement to the right along a supply curve -decrease in Qs is movement to the left along a supply curve
all of the following are likely to change the market supply curve
-the cost of labor -the expectation that prices are about to increase -the numbers of sellers offering the product
marginal costs
-what supply is determined by -cost of making additional products
costs producers face
1 rent 2 utilities 3 insurance 4 labor 5 marketing 6 materials
if an industry is highly profitable, new firms are likely to enter the market. this would be reflected in a shift of the
supply curve to the right
the supply of a product normally decreases if
taxes on the production of the product increase
supply
the amount of goods and services that businesses are willing and able to produce at different prices during a certain period of time
change in supply
*price does not change supply!!* determinants of supply
supply curve
a diagram showing the relationship between the price of a good and the quantity supplied per period of time
what is most likely to happen if there is an increase in the costs of production
decrease in supply
law of diminishing productivity
marginal costs of making additional goods always rise eventually -individual costs of more and more items go up with each additional item
higher prices allow businesses to increase production. this occurs because
marginal production costs usually rise when businesses increase their rates of production
soybeans are an important ingredient in making tofu. so, if the prices of soybeans suddenly increased
the supply curve of tofu would shift to the left