Principles of Economics- Mankiw (5th) 75

# Principles of Economics- Mankiw (5th) 75 - ± Figure 4-6 M...

This preview shows page 1. Sign up to view the full content.

CHAPTER 4 THE MARKET FORCES OF SUPPLY AND DEMAND 79 Table 4-6 lists the variables that determine the quantity supplied in a market and how a change in the variable affects the supply curve. Once again, price plays a special role in the table. Because price is on the vertical axis when we graph a supply curve, a change in price does not shift the curve but represents a movement along it. By contrast, when there is a change in input prices, technology, expecta- tions, or the number of sellers, the quantity supplied at each price changes; this is represented by a shift in the supply curve. In summary, the supply curve shows what happens to the quantity supplied of a good when its price varies, holding constant all other determinants of quantity supplied. When one of these other determinants changes, the supply curve shifts. Market Supply ( ± 3 ² 4) Price of Ice-Cream Cone 0 1 2 3 4 5 6 7 8 9 10 11 12 Quantity of Ice-Cream Cones \$3.00 1.50 2.00 2.50 1.00 0.50
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ± Figure 4-6 M ARKET S UPPLY AS THE S UM OF I NDIVIDUAL S UPPLIES . The market supply curve is found by adding horizontally the individual supply curves. At a price of \$2, Ben supplies 3 ice-cream cones, and Jerry supplies 4 ice-cream cones. The quantity supplied in the market at this price is 7 cones. Table 4-6 T HE D ETERMINANTS OF Q UANTITY S UPPLIED . This table lists the variables that can influence the quantity supplied in a market. Notice the special role that price plays: A change in the price represents a movement along the supply curve, whereas a change in one of the other variables shifts the supply curve. V ARIABLES T HAT A FFECT Q UANTITY S UPPLIED A C HANGE IN T HIS V ARIABLE . . . Price Represents a movement along the supply curve Input prices Shifts the supply curve Technology Shifts the supply curve Expectations Shifts the supply curve Number of sellers Shifts the supply curve...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online