Quantity Supplied The quantity supplied (Qs) of a good in a particular market (the amount producers wish to sell over a certain time period) depends on several variables. Many of the most important are listed below: ● Product’s own price – the quantity supplied is positively related to price. Suppliers find it more profitable to produce at higher prices than lower prices. Higher prices result in higher quantities supplied. ● Input Prices – when the prices of an input that is used to make a product rise, producing the good becomes less profitable, and quantity supplied decreases. When an input price falls, the opposite is true. EXAMPLE: By increasing the production costs of the ice cream, an increase in the price of sugar causes the quantity of ice cream supplied to decrease ● Technology - by reducing firms’ costs, advances in technology increase the quantity supplied. ● Government taxes or subsidies – taxes that increase the cost of production or subsidies that decrease the cost of production can affect quantity supplied in the expected direction.
You've reached the end of your free preview.
Want to read all 3 pages?
- Fall '08
- Supply And Demand, product’s own price