Principles of Economics- Mankiw (5th) 72

Principles of Economics- Mankiw (5th) 72 - supply schedule...

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76 PART TWO SUPPLY AND DEMAND I: HOW MARKETS WORK THE SUPPLY SCHEDULE AND THE SUPPLY CURVE Consider how the quantity supplied varies with the price, holding input prices, technology, and expectations constant. Table 4-4 shows the quantity supplied by Ben, an ice-cream seller, at various prices of ice cream. At a price below $1.00, Ben does not supply any ice cream at all. As the price rises, he supplies a greater and greater quantity. This table is called the supply schedule. Figure 4-5 graphs the relationship between the quantity of ice cream supplied and the price. The curve relating price and quantity supplied is called the supply curve. The supply curve slopes upward because, ceteris paribus, a higher price means a greater quantity supplied. Table 4-4 B EN S S UPPLY S CHEDULE . The
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Unformatted text preview: supply schedule shows the quantity supplied at each price. P RICE OF I CE-C REAM C ONE Q UANTITY OF C ONES S UPPLIED $0.00 0.50 1.00 1 1.50 2 2.00 3 2.50 4 3.00 5 supply schedule a table that shows the relationship between the price of a good and the quantity supplied supply curve a graph of the relationship between the price of a good and the quantity supplied Price of Ice-Cream Cone 2.50 2.00 1.50 1.00 1 2 3 4 5 6 7 8 9 10 11 Quantity of Ice-Cream Cones $3.00 12 0.50 Figure 4-5 B EN S S UPPLY C URVE . This supply curve, which graphs the supply schedule in Table 4-4, shows how the quantity supplied of the good changes as its price varies. Because a higher price increases the quantity supplied, the supply curve slopes upward....
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This note was uploaded on 07/30/2010 for the course ECON 120 taught by Professor Abijian during the Spring '10 term at Mesa CC.

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