Supply

SupplyQuantity SuppliedAmount of any good or service that sellers are willing and able to sell

Law of Supply: Other things equal (ceteris paribus), when the price of a good rises, the quantity supplied of the good also rises, and when the price falls the quantity supplied falls.Market vs. Individual SupplySum the individual supply curves to obtain the market supply curve

Shifts in SupplyInput Prices: If price of an input rises, producing the item is less profitable and the firm supplies lessTechnology: Innovation reduces labor needed and reduces costs thus the firm supplies more Shifts in Supply (cont.)3. Expectations: If a firm expects price to rise, it will supply less to the market today4. Number of sellers: self explanatory more sellers = more supplyEquilibriumPoint where supply and demand curves intersectCreates equilibrium (or market-clearing) price and equilibrium quantity where both buyers and sellers are satisfied

Shortage vs. SurplusSurplus = Market price is above equilibrium price so there is too much being supplied price will fall until equilibrium

Shortage = Quantity demanded is greater than quantity supplied; market price is below equilibrium price price will rise to equilibrium

Shifts affecting EquilibriumDoes it shift Demand or Supply or Both?