Supply

Supply is a schedule or curve showing the

various amounts of a product that producers
are willing and able to make available for sale
at each of a series of possible prices during a
specific period.

Law of Supply
As price rises, the quantity supplied rises; as
price falls, the quantity supplied falls.
Example : The supply schedule and the supply
curve

Market Supply
The market supply curve can be obtained by
horizontally adding the supply curves of the
individuals producers/firms.

Determinants of Supply
Resources/inputs prices
Technology
Taxes and subsidies
Price of other goods
Producer expectations
The number of sellers in the market

Changes in Supply vs Changes

in Quantity Supplies
Explain with diagrams

Market Equilibrium
Market equilibrium occurs where quantity
demanded equals quantity supplied
Q.D = Q.S
The equilibrium price is the price where the
intentions of buyers and sellers match.

Changes in Supply, Demand

and Equilibrium
Changes in demand only
Changes in supply only

Complex Cases: When both

supply and demand change
Supply increase; demand decreases
What effect will a supply increase and a
demand decrease for some good have on
equilibrium price and quantity.

Complex Cases: When both

supply and demand change
Supply decrease; demand increase
Supply increase; demand increase
Supply decrease; demand decrease

Complex Cases: When both

supply and demand change

Applications: Government-Set
Prices
Price ceiling: the maximum legal price a seller
may charge for a product or services.

Applications: Government-Set
Prices
Price floors: A price floor is a minimum price
fixed by the government.