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supply - MODEL OF SUPPLY The model of supply is an attempt...

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Supply slide 1 MODEL OF SUPPLY The model of supply is an attempt to explain the amount supplied of any good or service. SUPPLY DEFINED The amount of a good or service a firm wants to sell, and is able to sell per unit time.
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Supply slide 2 THE “STANDARD” MODEL OF SUPPLY The DEPENDENT variable is the amount supplied. The INDEPENDENT variables are: the good’s own price the prices of inputs used in its production the technology of production taxes and subsidies
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Supply slide 3 YOU COULD WRITE THE MODEL THIS WAY: The supply function for tacos Q S (tacos) = S(P tacos , P taco shells , P lettuce , P labor , P tomatoes , . . . ,technology, taxes & subsidies)
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Supply slide 4 THE SUPPLY CURVE The supply curve for any good shows the quantity supplied at each price, holding constant all other determinants of supply. The DEPENDENT variable is the quantity supplied. The INDEPENDENT variable is the good’s own price.
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Supply slide 5 THE LAW OF SUPPLY The Law of Supply says that an increase in a good’s own price will result in an increase in the amount supplied, holding constant all the other determinants of supply.
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