Lecture 3 - Principles of Macroeconomics Lecture 3. The...

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Principles of Macroeconomics Lecture 3. The Supply function Qs = f(P, Pr, w, E, W, T) Pr: price of related goods and services w: Factor prices E: producer expectations W: Weather T: Technology The supply function slopes upward The supply schedule P: 5 10 15 20 25 30 Qs: 100 200 300 400 500 600 The supply law: as the price of a good goes up, ceteris paribus, quantity supply rises and as the price of good goes down, ceteris paribus, quantity supplied decreases. Does the supply function shift? Yes, if a determinant of the supply function other than price changes.
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Difference between changes in quantity supplied and changes in Supply. A change in quantity supplied can be represented as a movement along the supply function while a change in supply can be seen as a supply function shift. Problem 1: Suppose that the supply function for apples is Qs = 10 + 5P and the price of apples increases by 5 up to 40. How does the supply function look like?
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Lecture 3 - Principles of Macroeconomics Lecture 3. The...

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