Supply a Quantity of a good that sellers wish to sell at each price a Supply curve: a schedule or graph showing supply
11 Supply: ◼ Quantity of a good that sellers wish to sell at each price ◼ Supply curve: a schedule or graph showing supply
Supply: Key points a willingness and ability to sell a relationship between price and quantity supplled = Quantity supplied is a function of price quantity supplied is determined by price a The Law of Supply Qs and p are positively related a Supply Curve: upward sloping Market supply: the sum of individual supply 12
12 Supply: Key Points ◼ willingness and ability to sell ◼ a relationship between price and quantity supplied ◼ Qs = f (P) – Quantity supplied is a function of price – quantity supplied is determined by price ◼ The Law of Supply: Qs and P are positively related ◼ Supply Curve: upward sloping ◼ Market supply: the sum of individual supply
Why upward sloping a Increasin opportunity cost(the low- hanging-fruit principle) Sellers reservation price: the smallest dollar amount for which a seller would be willing to sell an additional unit (marginal cost) 13
13 Why upward sloping? ◼ Increasin opportunity cost (the lowhanging-fruit principle) ◼ Seller’s reservation price: the smallest dollar amount for which a seller would be willing to sell an additional unit (marginal cost)
The Daily Supply Curve of pizza in chicago Figure 3.2, P.65 Supply 4 Exercise 3.2 -marginal cost when Od=10k Qd when P=3.50 81216 Quantity(,000s of slices/day) 14
14 The Daily Supply Curve of Pizza in Chicago Figure 3.2,P.65 Exercise 3.2 -marginal cost when Qd=10k -Qd when P=$3.50
S VS. Qs S Qs A relationship A number at a given between P and Qs P a curve A point on the curve Reasons for change Reasons for change change in factors change in P only other than p Change: a shift of the Change: a movement entire curve along the curve
15 S vs. Qs S Qs A relationship between P and Qs A number at a given P A curve A point on the curve Reasons for change: change in factors other than P Reasons for change: change in P only Change: a shift of the entire curve Change: a movement along the curve