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Chapter 5: Supply

Chapter 5: Supply. What is Supply?. What is Supply?. Supply – The amount of products offered for sale at all possible prices The Law of Supply – Supply is directly proportional to price (Price = Supply ). P. S. The Supply C urve looks like this (Opposite slope from the Demand Curve).

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Chapter 5: Supply

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  1. Chapter 5: Supply What is Supply?

  2. What is Supply? • Supply – The amount of products offered for sale at all possible prices • The Law of Supply – Supply is directly proportional to price (Price = Supply ) P S The Supply Curve looks like this (Opposite slope from the Demand Curve) QS

  3. Supply Schedule and Supply Curve P S 25 5 0 7 QS Same principles apply for the Individual Demand Curve and the Market Demand Curve…(Not going to repeat what we talked about in Demand) Change in Quantity Supplied

  4. Change in Supply • Like the Change in Demand, there are several reasons for Change in Supply: • Cost of Inputs • Productivity • Technology • Tax and Subsidies • Expectations • Government Regulations • Number of Sellers P S QS

  5. Elasticity of Supply Inelastic Supply Elastic Supply Unit Elastic Supply The Elasticity of Supply – The measure of quantity supplied in response to a price change… The Sole Determinant of Supply Elasticity is how quickly a firm can adjust production. The longer it takes to shift production the less elastic the product.

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