Supply
Chapter 4
SUPPLY
The quantity of goods and services that producers
are willing to offer at various prices during a
given time period.
LAW OF SUPPLY

States that producers supply more goods
and services when they can sell them at
higher prices and fewer goods and services
when they must sell them at lower prices.
EXAMPLE

If producers of Ipods can charge $300 for
their products, they will make more Ipods
than if they could charge only $200. In
other words, the higher price will lead to a
larger quantity of Ipods supplied.

Producers vary the supply of certain goods
and services in order to gain the largest
profit.
PROFIT

The amount of money remaining after
producers have paid all of their costs – a
producer makes a profit when revenues are
greater than the costs of production
(salaries, rent, bills, etc.).

There are two ways to show the relation
ship between the price of the good or
service and the quantity that producers will
supply.
1.
2.
Supply Schedule – this schedule lists each
quantity of a product that producers are
willing to to supply at various market
prices.
Supply Curves – plots on a graph the
information from a supply schedule.

Because markets do not stand still, supply
curves will shift to the left (decrease in
supply) or the right (increase in supply).
SHIFTS IN SUPPLY ARE
CAUSED BY:
1.
2.
3.
4.
5.
Prices of resources.
Technology
Competition
Prices of related goods
Government tools ( i.e. – taxes)