Chapter 3 - Lecture notes (cont).pdf - Quantity Supplied The \u200bquantity supplied(Qs of a good in a particular market(the amount producers wish to sell

Chapter 3 - Lecture notes (cont).pdf - Quantity Supplied...

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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.
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