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 quantity of the good supplied will rise – The words, “everything else remains the
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This note was uploaded on 02/17/2011 for the course ECON 011 taught by Professor Yezer during the Fall '07 term at GWU.

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

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