Supply

1
Supply

• The supply curve shows the quantity that
  producers are willing and able to supply at each
  and every price, ceteris paribus.
• According to the law of supply,a higher quantity
  will be supplied at higher prices, ceteris
  paribus. The supply curve is derived from the
  marginal cost curve as the extra cost of
  producing a unit increases, producers need a
  higher price to produce the product.

2
Supply Schedule

• The supply of a product will depend on factors
  such as the number of producers, the state of
  technology, the cost of each factor of
  production, taxes and subsidies, aims of
  producers and of course, price.

3
Supply schedule

• Price
• 1
• 2
• 3
• 4
• 5
• 6

• QS (Bills of barrels)
• 0
• 5
• 10
• 15
• 20
• 25

4
Supply Price (P)

• Supply illustrates the relationship between price
  and quantity supplied (QS). Price interacts with
  QS to detrermine supply. Once again, any change
  in the price will cause movement along the supply
  curve. All other determinants of supply cause it
  to shift. An increase in P causes an extension of
  supply. P? QS?. There is a positive relationship
  between Price and QS--- they move in the same
  direction.

5
Shifts in the Supply Curve

• All non-Price determinants of supply cause a
  SHIFT in the supply curve (either an
  expansion-outward movement or contraction-inward
  towards the access).
• Graph page 10 Gillespie
• Outward shifts mean that more is supplied at each
  and every price.

6
Non Price determinants of Supply

• Determinant effect
• suppliers?
• Technology improves
• Factor price?
• Government subsidy?
• Government Tax?
• Change in P of x?
• Good weather
• Improved management

• Shift

7
Supply Function

• QSxPxPsPfGtechnologyweather
• Managementetc

8
More on (joint supply)

• A change in the price of other goods works like
  this
• If good B falls in Price then suppliers will
  move away from producing B and produce more of
  good A, which will increase the supply of A.