SECTION III OUTLINE

SECTION III OUTLINE - I. SECTION III SUPPLY &...

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I. a. Firm Supply i. A firm’s supply shows the quantity it offers to sell at various prices b. Market Supply i. We can generate the market supply curve as the horizontal summation of its component supply curves c. Supply and Quantity Supplied i. Supply refers to the whole curve ii. The quantity supplied refers to the amount supplied at a specific price iii. When the price of a good changes, we move along a stationary supply curve, giving a change in the quantity supplied 1. A decrease in the price gives a decrease in the quantity supplied iv. A change in supply is a shift of the entire supply curve left or right to a new position 1. Supply and demand increases shift both curves rightward 2. A supply decrease is a leftward shift of the entire supply curve v. The major, but not exclusive forces which shift the supply curve are: 1. Changes in the number of suppliers a. The greater the number of firms willing to supply a good at various prices, the greater will be the amount supplied at those prices 2. Cost of inputs a. Increases in the price of inputs will decrease the supply and vice versa 3. Technology a. Advances in technology increase supply 4. Weather d. Equilibrium i. A surplus or excess supply is when the quantity supplied exceeds the quantity demanded 1. When this occurs, many suppliers cut their prices in order to draw down their inventories and to bid buyers away from other sellers. 2.
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SECTION III OUTLINE - I. SECTION III SUPPLY &...

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