Supply Part II

Supply Part II - Supply Part II Supply A firms quantity...

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Supply Part II
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2 Supply A firm’s quantity supplied of a good is the specific amount its managers would choose to sell over some time period, given – A particular price for the good – All other constraints on the firm Market quantity supplied (or quantity supplied) is the specific amount of a good that all sellers in the market would choose to sell over some time period, given – A particular price for the good – All other constraints on firms
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3 Quantity Supplied Implies a choice Quantity that gives firms the highest possible profits when they take account of the constraints presented to them by the real world Is hypothetical Does not make assumptions about firms’ ability to sell the good How much would firms’ managers want to sell, given the price of the good and all other constraints they must consider? Stresses price The price of the good is just one variable among many that influences quantity supplied We’ll assume that all other influences on supply are held constant, so we can explore the relationship between price and quantity supplied
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4 The Law of Supply States that when the price of a good rises and everything else remains the same, the
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