blanchard_ch03

# 50 but if 10 million bars are produced each week

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: n bars are produced each week, someone is willing to accept \$1.50 for the last bar produced. A Change in Supply 0 5 15 20 25 10 Quantity supplied (millions of bars per week) Price Quantity supplied (dollars per bar) (millions of bars per week) When any factor that influences selling plans other than the price of the good changes, there is a change in supply. Six main factors bring changes in supply. They are changes in ■ A 0.50 0 ■ B 1.00 6 ■ C 1.50 10 D 2.00 13 E 2.50 15 ■ ■ ■ The prices of factors of production The prices of related goods produced Expected future prices The number of suppliers Technology The state of nature Prices of Factors of Production The prices of the facThe table shows the supply schedule of energy bars. For example, at a price of \$1.00, 6 million bars a week are supplied; at a price of \$2.50, 15 million bars a week are supplied. The supply curve shows the relationship between the quantity supplied and the price, other things remaining the same. The supply curve slopes upward: As the price of a good increases, the quantity supplied increases. A supply curve can be read in two ways. For a given price, the supply curve tells us the quantity that producers plan to sell at that price. For example, at a price of \$1.50 a bar, producers are willing to sell 10 million bars a week. For a given quantity, the supply curve tells us the minimum price at which producers are willing to sell one more bar. For example, if 15 million bars are produced each week, the lowest price at which a producer is willing to sell the 15 millionth bar is \$2.50. animation tors of production used to produce a good influence its supply. To see this influence, think about the supply curve as a minimum-supply-price curve. If the price of a factor of production rises, the lowest price that a producer is willing to accept for that good rises, so supply decreases. For example, during 2008, as the price of jet fuel increased, the supply of air travel decreased. Similarly, a rise in the minim...
View Full Document

Ask a homework question - tutors are online