BASIC PRINCIPLES OF SUPPLY Flashcards
it refers to the quantity of goods that a seller is willing to offer for sale.
Supply
it shows the different quantities the seller is willing to sell at various prices.
Supply schedule
it shows the dependence of supply on the various determinants that affect it.
Supply function
a graphical presentation of the supply schedule; it is upward sloping indicating the direct relationship between the price of the good and the quantity supplied of that good.
Supply curve
as the price increases, the quantity supplied of that product also increases.
THE LAW OF SUPPLY
under the assumption of ceteris paribus, there is a direct relationship between the price of a good and the quantity supplied of that good.
THE LAW OF SUPPLY
NON-PRICE DETERMINANTS OF SUPPLY
- PRICE OF PRODUCTION INPUT
a. INTERMEDIATE INPUT
b. FACTOR INPUT - TAXES
- TECHNOLOGY
- EXPECTATION
value added to raw materials through the process of production.
- PRICE OF PRODUCTION INPUT
raw materials; these are still going to be processed or transformed into higher levels of output.
a. INTERMEDIATE INPUT
processing or transforming input.
b. FACTOR INPUT
➔ monetary expense paid to the government.
➔ taxes ↑ QS ↓
- TAXES
the manner in which factor inputs process intermediate inputs is done through technology.
➔ improved technology (cost of production)↑ QS ↓
➔ obsolete technology (cost of production) ↓ QS ↑
- TECHNOLOGY
➔ materials and resources ↑ QS ↑
➔ materials and resources ↓ QS ↓
- AVAILABILITY OF RAW MATERIALS
AND RESOURCES
➔ anticipation on what is going to happen on the price of the commodity.
➔ PFUTURE ↑ QS ↑
➔ PFUTURE ↓ QS ↓
- EXPECTATION
