Ch 4 Supply & Vocab

Increase in Both Demand and Supply

-Increases the equilibrium quantity. -The change in the equilibrium price is ambiguous because the: Increase in demand /raises/ the price. Increase in supply /lowers/ the price.

Decrease in Demand and Increase in Supply

-Lowers the equilibrium price. -The change in the equilibrium quantity is ambiguous because the: /Decrease/ in demand /decreases/ the quantity. Increase in supply /increases/ the quantity.

The main influences on selling plans that change supply are

-Prices of related goods -Prices of resources and other inputs -Expected future prices -Number of sellers (more sellers , more supply) -Productivity

Increase in Demand and Decrease in Supply

-Raises the equilibrium price. -The change in the equilibrium quantity is ambiguous because the: Increase in demand increases the quantity. Decrease in supply decreases the quantity.

*change in quantity supplied *

a change in the quantity of a good that suppliers plan to sell that results from a change in the [[price]] of the good.

*change in supply*

a change in the quantity that suppliers plan to sell when any influence on selling plans other than the price of the good changes. A change in supply means that there is a new supply schedule and a new supply curve.

*Productivity*

An increase in productivity lowers costs and increases supply. For example, an advance in technology increases supply. A decrease in productivity raises costs and decreases supply. For example, a severe hurricane decreases supply.

*The Law of Supply *

Other things remain the same, If the price of a good /rises/, the quantity supplied of that good increases. If the price of a good /falls/, the quantity supplied of that good /decreases./

*change in supply*

a change in the quantity that suppliers plan to sell when any influence on selling plans _other than the price_ of the good changes.

*substitute in production *

a good that can be produced in place of another good. For example, a truck and an SUV are substitutes in production in an auto factory. The supply of a good /increases/ if the price of one of its substitutes in production /falls./ The supply a good /decreases/ if the price of one of its substitutes in production /rises./

*complement in production*

a good that is produced along with another good. For example, cream is a complement in production of skim milk in a dairy. The supply of a good /increases/ if the price of one of its complements in production /rises/. The supply a good /decreases/ if the price of one of its complements in production /falls/.

*Quantity supplied *

is the amount of a good, service, or resource that people are willing and able to sell during a specified period at a specified [[price.]]