Willingness to produce and sell means that the person

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Unformatted text preview: ingness and ability to produce and sell. Willingness to produce and sell means that the person wants or desires to produce and sell the good. Ability to produce and sell means that the person is capable of producing and selling the good. E X A M P L E : Jackie is willing to build and sell wooden chairs, but unfortunately she doesn’t know how to build a chair. In other words, she has the willingness but not the ability. Outcome: Jackie will not supply chairs. What Does the Law of Supply Say? Suppose you are a supplier, or producer, of TV sets, and the price of a set rises from $300 to $400. Would you want to supply more or fewer TV sets at the higher price? Most people would say more. If you did, you instinctively understand the law of supply, which says that as the price of a good increases, the quantity supplied of the good increases, and as the price of a good decreases, the quantity supplied of the good decreases. In other words, price and quantity supplied move in the same direction. This direct relationship can be shown in symbols: Law of Supply If P ↑ then Qs ↑ If P↓ then Qs↓ (where P price and Qs quantity supplied) When economists use the word supply, they mean something different from what th...
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This document was uploaded on 01/16/2014.

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