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resources and technology are the constraints that limit what is possible
reects a decision about which technologically feasible items to produce

Quantity supplied
good or service is that amount that producers plan to sell during a given time period
at a particular pice
Quantity suppled Quantity demanded
measured as an amount per unit of time

The Law of Supply
higher the price - greater the quantity supplied
- because of marginal cost increases. As quantity produced of any good increases,
marginal cost of producing the good increases
lower the price- smaller the quantity demanded
when price of a good increases, producers are willing to incur a higher marginal cost,
so they increase production.
higher price brings forth an increase in QSupplied

Supply Curve and Supply Schedule
Supply - refers to the entire relationship between price of good and QSupplied
Quantity Supplied - a point on the supply curve- at a particular price.
Supply curve -the relationship between the quantity supplied of good and it price
when all other inuences on producer' planned sales remain the
Supply Schedule- lists the quantities supplied at each price when all other inuences
on producer's planned sales remain the same
**** Supply cure slopes upwards as the price increases and Qsupplied increases***
Minimum Supply Price
- supply curve can be a minimum-supple-price-curve
( shows the lowest price at which someone is willing to sell)
- * lowest price =marginal cost

A Change in Supply
6 main factors
prices of factors of production 1.
prices of related goods produced 2.
expected future prices 3.
number of suppliers 4.
technology 5.
state of nature 6.

Price of Factors of Production
price of factors of production rises- supply decreases (lowest price that producers is
willing to accept for that good rises )
price of factor of production falls- supply increases

Price of Related Goods Produced
Substitutes in production - goods that can be produced by using the same resource
substitute rises- supply decreases
substitute falls- supple increases
Complements in production- goods that must be produced together
complement falls - supply decreases
complement rises - supply increases

Expected Future Prices
if price of good rises, the return from selling the good in future increases and is higher
than today.
price rises- supply decrease
price falls- supply increases

The Number of Supplier
The larger the number of rms that produce a good, the greater is supply of good
Number of supplier decreases- Supply decreases
Number of supplier increases- Supply increases

the way that factors of production are used to produce a good
A technology occurs when a new method is discovered that lowers the cost of
producing a good
Technology change decreases- Supply decrease
Technology Change increase- Supply Increase

The State of Nature
State of nature includes all the natural forces that inuence production
Good weather can increases the supply of many agricultural product
Bad weather can decrease their supply

A change in the Quantity Supplied vs. a Change in Supply
Change in the Qsupplied- movement along the curve
Change in Supply- Shift of the curve
Change in price = change in Qsupplied
Price falls/Qsupplied decreases = movement down the curve
Price rises/Qsupplied increases = movement up the curve
Changes in selling plan = change in supply
Supply increase = shift rightward
Supply decreases= shift leftward

Market Equilibrium
Price of good rises, the QDemanded decreases and the Qsupplied increases
Equilibrium isa situation in which opposing forces balance each other
occurs when the price balances buying plans and selling plans
Equilibrium price- price at which the QDemanded equals the QSupplied
Equilibrium Quantity- quantity bought and sold at equilibrium price
market moves towards equilibrium because
1. price regulates buying and selling plans
2. price adjusts when plans don't match

Supply> Demand = Surplus
Demand > Supply = Shortage

Price Adjustment
price below equilibrium = shortage
price above equilibrium = surplus

A shortage Forces the Price up
- some producer raise the price/ some increase their output
- as producers pushes the price up, the price rises towards it equilibrium
- rising price reduces shortage b/c it decreases QDemanded and increase
-when the price increased to the point at which there is no longer a shortage, the forces
moving the price stop operating-- the price comes to rest at equilibrium

A Surplus Forces the Price down
- producers cut the price-- price falls towards equilibrium
- falling prices= decrease surplus b/c it increases QDemanded and decreases
- when the price has fallen to the point at which there is no longer a surplus, the forces
moving the price stop operating -- the price comes to a rest at equilibrium

The Best Deal Available for Buyers and Sellers
Price below equilibrium = forced upwards
- buyers don't refuse to buy it at a higher price because they value good more than its
current price but can't satisfy their demand at current price
Price above equilibrium = bid downward
- Sellers refuse to sell at lower price because minimum supply price is below current
current price -- seller willingly lower the price to gain market share
Price at QDemanded= QSupplied- buyers and sellers can't do business at a
better price
- buyers pay the highest they are willing to pay for the last unit
- sellers receive the lowest price at which they are willing to supply the lat unit sold.

demand increase - price falls , quantity increases
demand decreases - price rises , quantity decreases

supple increases- price falls, quantity increases
supply decreases- price rises, quantity decreases

Increase in both demand and supply
- an increase in demand rises the price and an increase in supply
decreases the price, so we can't say price will increase or fall
Decrease in Demand and Increase in supply
- decrease in demand decreases the quantity and an increase
in supply increases the quantity, so we can't predict change in