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Supply (Shifts in supply curve (Change in Price of Related Goods…

- - - - Adverse events decrease supply
  - - - Goods that are produced with same resources, so resources used in one good cannot be used to produce the other
        
        Increase in supply of A decreases supply of B
    - - Goods that are produced jointly with same resources
        
        Increase in supply of A increases supply of B
  - - - Imposed on spending to buy goods and services
        
        Paid partly by consumers, but paid to govt. by producers
      - Specific Tax
        
        Tax levied as a fixed amt per unit sold, irrespective of price
        
        Upward and parallel shift of supply curve, amt of tax imposed same for all prices
      - Ad valorem tax
        
        As a percentage of the selling price of a good
        
        Upward and pivotal shift of supply curve as absolute amt of tax imposed different for different prices
        
        Post-tax supply curve diverges from pre-tax supply curve as quantity supplied increases
      - Increases marginal cost of production
        
        Marginal cost = addition to total cost as a result of producing an additional unit of output
      - Shifts supply curve upwards by amt of tax
        
        To persuade firm to produce same quantity as before tax, it must now receive a price that allows it to fully recoup the tax it has to pay
    - - Payment made by govt. to producers to encourage production of certain goods, but not in exchange for any goods and services
        
        Decrease marginal cost of production
        
        Supply curve shifts downwards, as producers need lower price to offer same quantity for sale
- - - - Firms require higher prices to produce more in short run