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wage decreases the supply of hamburgers.
Prices of Related Goods Produced The prices of
related goods that firms produce influence supply. For
example, if the price of energy gel rises, firms switch
production from bars to gel. The supply of energy bars
decreases. Energy bars and energy gel are substitutes in
production—goods that can be produced by using the
same resources. If the price of beef rises, the supply of
cowhide increases. Beef and cowhide are complements in
production—goods that must be produced together. 9160335_CH03_p053-080.qxd 62 6/22/09 8:56 AM Page 62 CHAPTER 3 Demand and Supply Expected Future Prices If the price of a good The Number of Suppliers The larger the number of firms that produce a good, the greater is the supply of
the good. And as firms enter an industry, the supply
in that industry increases. As firms leave an industry,
the supply in that industry decreases.
mean the way that factors of production are used to
produce a good. A technology change occurs when a
new method is discovered that lowers the cost of producing a good. For example, new methods used in
the factories that produce computer chips have lowered the cost and increased the supply of chips. Changes in the influences on producers’ planned
sales bring either a change in the quantity supplied
or a change in supply. Equivalently, they bring
either a movement along the supply curve or a shift
of the supply curve.
A point on the supply curve shows the quantity
supplied at a given price. A movement along the
supply curve shows a change in the quantity supplied.
The entire supply curve shows supply. A shift of the
supply curve shows a change in supply. 2.50 E 2.00 E' D' D C' C B' B 0.50 A 0 Supply of
(new) Supply of
(original) 1.00 The State of Nature The state of nature includes all A Change in the Quantity Supplied
Versus a Change in Supply 3.00 1.50 Technology The term “technology” is used broadly to the natural forces that influence production. It
includes the state of the weather and, more...
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