Chapter 3 (2)

Question 1

SUPPLY

Answer 1

describes how much of a good / service producers = offer for sale under given circumstances

Question 2

QUANTITY SUPPLIED

Answer 2

is the amount of a particular good or service that producers will offer for sale at a given price at a specified period

► as w/ demand – > we can find overall market supply by adding up the individual decisions of each producer

► Each producer = will have a different price point at which it decides it’s worthwhile to supply such products.

Question 3

THE SUPPLY CURVE

Answer 3

like demand, supply = can be represented as either a table or graph.

Question 4

SUPPLY SCHEDULE

Answer 4

is a table that shows the quantities of a particular good / service that producers = will supply at various prices

Question 5

SUPPLY CURVE

Answer 5

is a graph of the information in the supply schedule.

►Just as the demand curve = showed consumers’ willingness to buy – > the supply curve = shows producers’ willingness to sell:

-It shows the minimum price producers must receive to supply any given quantity.

Question 6

DETERMINANTS OF SUPPLY

Answer 6

the law of supply = describes how the quantity that producers = willing to supply changes as prices changes.

Question 7

but what determines the quantity supplied at any given price?

Answer 7

As w/ demand, a # of non-price factors = determine the opportunity cost of production & therefore producers’ willingness to supply a good / service

►When a non-price determinant of supply changes – > the entire supply curve = will shift

►Such shifts = reflect a change in the quantity of goods supplied at EVERY price

Question 8

the non-price determinants of supply = can be divided into 5 major categories:

Answer 8

• Prices of related goods
• Technology
• Prices of inputs
• Expectations
• And the # of sellers

Question 9

WHAT HAPPENS WHEN ONE OF THE NON-PRICE DETERMINANTS CHANGES?

Answer 9

• If positive influence, supply increases.

* If negative influence, supply decreases.