The number of sellers drop. The supply will decrease. Questions with this?

Alrig
ht. Perfect. A decrease in the supply of jorts can be caused by what? A decrease
in the consumer preferences for jorts. So this one you have to be really really
careful. "Wait, consumer preferences, yeah. That will make it." Oh no, that's g
onna shift demand. This must be on the supply of jorts. Other than expected futu
re price, no one affect would cause both supply and demand to shift. If it's a c
onsumer preferences dropping, that's gonna cause the demand to drop. That's not
what we want. A decrease in the price of an alternative good for the producer. A
lternative good. So let's say I make either jorts or denim jackets. If denim jac
kets, suddenly the price of denim jackets goes way down and I'm making denim jac
kets. I should stop making those things right? Because they're not gonna give me
any money. Instead should go over to jorts and make all those. Makes sense to
everyone? That would cause for the supply to actually increase. A decrease in th
e quality of technology, im sorry increase in the quality of technology. Quality
of technology, if it's easier to make a good that's always gonna cause supply t
o go up. And a decrease on the number of firms producing jorts, that's gonna cau
se the supply to drop. Fewer companies making it, supply would go down. Price of
alternative good. If I'm a producer of jorts, an alternative good it means some
thing I make instead of jorts. So I make jorts and jean jackets or denim jackets
. Suddenly, the price of denim jackets goes way down, as a manufacturer of denim
jackets, I don't wanna make those anymore because I'm not gonna make any money.
So instead of that what do I make? Jorts. So that's why supply goes up.
In this above figure, what would cause us to move from Point A to Point B? Again
, A and B, that's moving along a supply curve. So you'd say that would be going
from P1 up to P2. It would be increase on the price of the good. It's choice B.
Some things are very very easy. Some of them very quick. Some of them, not so mu
ch.
This one's probably the toughest one. Assume that rubber is a substitute of prod
uction for plastic. Substitutes of production, are they produced together or ins
tead of each other? Instead. Just like the alternative. These are produced inste
ad of one another. I have rubber and I have plastic. If the price of rubber goes
up, there are two things that are gonna happen here. If the price of rubber goe
s up, the law of supply tells me one thing. When the price of rubber goes up, so
mething's gonna happen in the quantity supplied of rubber. The law of supply say
s "When the price goes up, quantity supply goes up as well." We are willing to m
ake more of that good. So quantity supply increases. But also, we have an altern
ative or a related good here. If I'm now making more rubber, I must be making le
ss plastic. So supply itself of plastic will drop. So what's the choice, B and C
. And the choice D.
In market equilibrium, without supply without demand, market equilibrium is defi
ned as this point right here, where the supply meets demand. We'll be doing a wh
ole lot of problems at equilibrium shifting figure and what's going on. You can
find some P star, some Q star. You call those equilibrium price, equilibrium qua
ntity. There's nothing much more to that. At equilibrium, the best point, the be
st position for any market to be. Adam Smith's Wealth of Nations