AEM 250 Lec4 Supply and Markets 09-01-10 sv

# AEM 250 Lec4 Supply and Markets 09-01-10 sv - Supply...

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Supply Schedules, Curves, and Functions Supply Schedule : a tabular presentation showing the total quantity of a particular good that sellers wish to sell at each price, ceteris paribus . Supply Curve: a curve or graph showing the total quantity of a good at sellers wish to sell at each price eteris paribus that sellers wish to sell at each price, ceteris paribus . – Price (P) is on the vertical or ‘Y’ axis. – Quantity (Q) is on the horizontal or ‘X’ axis. Supply Function : a mathematical relationship describing the total quantity of a good that sellers wish to sell at each price – e.g., Water Supplied = S(P) = 1,000,000*P = 10 6 * P (supply curve) – Or, Price of Water = MC(Q) = 10 -6 * Q (marginal cost or MC curve)

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Stralya’s Supply Of Water Price in Dollars Quantity Supplied (quarterly ater per kilo liter (kL) P water production in millions of kilo liters (kL) 2.50 Q sw = P 2.25 50 1.50 2.00 per kL 1.50 1.00 0.50 1.00 Price \$AU 0.00 .00 0.50 000 0.00 0.50 1.00 1.50 2.00 2.50 Million kL per Quarter
The “Law” of Upward Sloping Supply • When market price rises, producers are willing and able to bring more of the good to market because: – Higher prices yield suppliers higher profits – giving them an incentive to produce more. – Producing more costs more, as inputs into production have to be

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AEM 250 Lec4 Supply and Markets 09-01-10 sv - Supply...

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