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5. Supply and Equilibrium

# 5. Supply and Equilibrium - Three Ways to Represent Supply...

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11 Three Ways to Represent Supply 1. A Schedule 2. A Curve 3. An Equation or function

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22 Supply Schedule Let’s consider the supply schedule for root beer at OSU. P (\$ per pack) Qs (per month) \$ 1. 50 50 2. 00 85 2. 50 115 3. 00 135 3. 50 170 Units of thousands of six-packs By adding up the different quantities, we could get a schedule which might be like this. We derive a supply schedule by taking survey of all the manufacturers of root beer that students drink and asking them how much root beer they would produce to sell to the university community in a month at various prices.
33 Supply Curve Now, the information in the table of the root beer supply schedule translates directly into a supply curve . 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 0 20 40 60 80 100 120 140 160 180 Q (packs/thousand) P (\$/pack) Supply Curve

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44 Supply - Supply function: QS = g(p) Example: QS = 5 + 0.4p - Supply curve is upward sloping - Price and quantity move in the same direction on a supply curve.
55 The Law of Supply Other things remaining the same, the higher the price of a good, the greater is the quantity supplied. So, P and Q move in the same direction on a supply curve.

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66 Why Supply Slopes Upward As production is expanded, producers have to turn to less efficient facilities and resources. These less efficient resources will be more expensive in that we will get less output per unit of input of these poorer resources. So producers have to be offered a higher price to coax out this more expensive production.
77 Supply We represent supply as a function of price in the 2-dimensional graph. But other things also influence or determine supply. If one of there other things changes, we will get a shift of the entire

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5. Supply and Equilibrium - Three Ways to Represent Supply...

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