Market supply

Supply is the willingness and ability to sell a range of quantities of a good at a range of prices, during a given time. Willingness and ability. Range of quantities and prices. A given time period.

Supply price is the minimum price that sellers would be willing and able to accept for a given quantity of a good. Sellers have a lower limit on the price that they would be willing and able to accept for a good, compared to the upper limit of the demand price. Sellers are willing and able to accept a higher price. In fact, they would be glad to sell a good for a billion dollars... or more. The minimum supply price is based on the fact of economic life that people prefer more to less.

Quantity supplied is the specific quantity of a good that sellers would be willing and able to sell at a specific price. Price and quantity supplied are a pair of numbers that go together. Quantity supplied is not the same as supply. Supply is the entire range of prices and quantities (all pairs of numbers). Quantity supplied is a specific quantity at a specific price (a quantity paired with a price).

Supply as the range of prices and quantities that sellers are willing and able to sell at different prices. Sellers must be both willing and able to sell a good to have a supply. While willingness can influence some supply, ability, which is based on production cost, is more important. Supply includes a range of prices and quantities, not just a specific quantity. Supply is analyzed during a given time period. Supply price as the minimum price sellers would be willing and able to accept for a given quantity. Quantity supplied is the specific quantity sellers would be willing and able to sell at a specific price.

The law of supply is a direct relationship between supply price and the quantity supplied, ceteris paribus. Direct relationship means that people sell more of a good if the price is higher and less if the price is lower. The law of supply is not as rigid as the law of demand. The price and the quantity supplied are not always directly related. Higher prices could cause an increase or a decrease in the quantity supplied.

Ceteris paribus means other things remain unchanged. Law of supply applies exclusively to the relationship between supply price and quantity supplied. All other things that can affect supply must remain constant to avoid distorting this relationship. Because supply is affected by many factors other than price, the price/quantity supply relationship can get lost when other things change. Other factors that affect supply are called supply determinants.

The answer rests with production cost. In particular, the law of supply exists because of the law of increasing opportunity cost. As we saw with production possibilities analysis, by increasing the production of a good, the opportunity cost of production increases. Production cost increases as we increase production. To supply a larger quantity, producers need to cover these higher production costs with a higher price.

The law of supply, which is an economic principle stating that supply price and quantity supplied are directly related, ceteris paribus. The fact that the law of supply is not as rigid as the law of demand. The ceteris paribus assumption, holding other things unchanged, that is used when using the law of supply. The law of supply is based on increasing production cost, which depends on the law of increasing opportunity cost.

A supply schedule presents the relationship between supply price and quantity supplied. Our relationship is between the supply price in the middle column and the quantity of stuffed animals supplied in the right-hand column.

Ceteris paribus factors do not change. Quantities are supplied for a specific time period, such as one year.

First, higher prices go with larger quantities supplied-the law of supply. Second, the prices are minimum values for the given quantities. Third, supply is the whole set of price/quantity pair numbers. Quantity supplied is any single number at the specified price. Fourth, these numbers are hypothetical, presenting a 'what if' relationship.

A supply schedule can be use to plot a supply curve. The connected plotted points are called a supply curve. A supply curve has a positive slope. Higher prices correspond with larger quantities. The supply curve embodies the law of supply.

The area above the supply curve is the supply space. The curve represents the minimum price that sellers would be willing to accept. Sellers would be willing to accept more than the supply price on the supply curve, but not less.

Ceteris paribus is the notion that other things remain constant. We make this assumption because things other than price affect supply. These other, ceteris paribus factors, give us useful analytical tools for examining supply and the market. We can turn these factors off and on to better understand how the market works. The ceteris paribus factors are called determinants of supply.

The supply schedule as a table of price/quantity numbers that illustrate the supply relation and the law of supply. The supply curve is derived from the supply schedule. The positive slope of the supply curve reflects the law of supply. The supply curve, and the supply price, as the lower limit of supply space.

Supply determinants shift the supply curve. The supply curve is drawn assuming that only price and quantity change. The determinants are assumed to be constant. A change in one of the determinants can cause: An increase in supply, a rightward shift, which means that for any price, for every price, sellers are willing and able to sell more of the good.

Supply determinants shift the supply curve. The supply curve is drawn assuming that only price and quantity change. The determinants are assumed to be constant. A change in one of the determinants can cause: A decrease in supply, a leftward shift, which means that for any price, for every price, sellers are willing and able to sell less of the good.

The five determinants that cause the supply curve to shift are: Resource prices: If the price of any resource (labor, capital, land, or entrepreneurship) changes, so too does production cost and the ability to supply a good. Technology: Improving production techniques enhance the ability to supply a good. Prices of other goods: Goods using the same inputs can be either substitutes or complements in production. Expectations: Sellers' current supply depends on expectations of future prices. Number of sellers: More sellers, more supply. Fewer sellers, less supply.

Supply, the whole range of prices and quantities Quantity supplied, a specific quantity supplied at a specific price.

Change in supply, we are changing, moving, shifting, the entire supply curve, the whole set of prices and quantities is changing. The five determinants change the supply. Change in quantity supplied, we have moved to a new quantity on an same supply curve. Only the price of the good changes the quantity supplied. This difference lets us analyze cause and effect. Don't confuse these two.

Ceteris paribus assumption makes further analysis of supply and markets possible. Changes in the supply determinants cause rightward or leftward shifts in the supply curve. The five basic supply determinants: resource prices, technology, prices of other goods, sellers' expectations, and number of sellers, each shifts the supply curve. Change in the price of a substitute-in-production affects supply differently than a change in the price of a complement-in-production. The difference between a change in supply, caused by a change in a supply determinant, and a change in quantity supplied, caused by a change in price.

Supply is directly connected to the scarcity problem, especially limited resources. Scarcity exists because society has limited resources, but unlimited wants and needs. Markets were developed as a means of addressing the problem of scarcity: The supply side of the market comes from the 'limited resources' side of the scarcity problem. The demand side of the market comes from the 'unlimited wants and needs' side of the scarcity problem

Market supply

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Market supply