Supply Curve

Supply - Defined

Supply: the quantity of goods and services that producers are willing to offer at various possible prices during a given time period.

Quantity Supplied: the amount of a good or service that a producer is willing to sell at each particular price.

***On a Graph, Supply is the Curve itself, while Quantity Supplied is each individual point that make up the curve***

Law of Supply

Producers supply more goods and services when they can sell them at higher prices and fewer goods and services when they must sell them at lower prices.

Cost of Production

Wages and salaries, rent, interest on loans, bills for electricity, raw materials, and any other goods and services used to manufacture a product.

Elastic & Inelastic Supply Elastic Supply: When a small change

in price causes a major change in the quantity supplied. They can be made quickly, inexpensively

using few resources (T-shirts, mugs, pens…)

Inelastic Supply: When a change in a good’s price has little impact on the quantity supplied. These items require a lot of Time, Money

and Scarce resources. (Gold, Housing, Airplanes)

Determinants of Supply: Factors, OTHER THAN PRICE

that can shift the supply curve left or right.

1. Input Prices: The lower the cost of production, the more a producer is willing to produce.

Determinants of Supply: Input Prices (Government

Tools) Taxes – Higher taxes = Supply

curve shifts to the left. Subsidies – Government Aid to

certain Types of Businesses. (Farmers)

Regulation – Government regulations cause higher costs of production.

Determinants of Supply: 3. New Technology – New ways to

produce a good. 4. Competition – The more

competitors in a market, the higher the supply.

5. Prices of Related Goods – Suppliers in a particular field are more likely to supply a higher priced good.

6. Producer Expectations