Supply and Demand - Supply Flashcards
what does supply represent?
the behaviour of sellers
what is the quantity supplied?
the quantity producers are willing/able to sell at a particular price
as the _______ increases, so does the quantity supplied
price
what are the 5 main reasons for shifts in the supply curve?
input prices prices of related goods/services technology expectations number of producers
a _________ in the price of an input (all else equal) __________ profits and encourages more supply (and vice versa)
decrease, increases
what is the relationship between inputs and supply?
inputs used in production have opportunity costs; sellers choose inputs whose profit is highest
sellers will supply ________ of a good if its profitability _______ (and vice versa)
less/more, falls/rises
what are substitutes-in-production?
two or more goods that can be produced using the same resources
what are complements-in-production?
two or more goods that are jointly produced using the same resources
an _________ in the price of one substitute good causes a decrease in the supply of the other
increase
an increase in the price of one complement good causes an ________ in the supply of the other
increase
what effect does technology improvements have on supply?
lowers cost and increases supply
how do expectations affect supply?
expectation of a higher price for a good in the future decreases current supply of the good
sellers adjust current offerings in anticipation of direction of future prices in order to obtain highest possible price
as producers enter and exit the market, overall _________ changes
supply
what is the difference between entry and exit?
entry: implies more sellers in market, increasing supply
exit: implies fewer sellers in market, decreasing supply
