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MARKET FORCES OF SUPPLY, Suppliers want to make lots of the good,…
MARKET FORCES OF SUPPLY
Supply
- Quantity supplied is the amount of a good that sellers are willing and able to sell.
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- The law of supply states that, other things equal, the quantity supplied of a good rises when the price of the good rises.
- the higher the price of coffee, the more coffee producers want to produce at that price.
Supply Schedule
- The supply schedule is a table that shows the relationship between the price of the good and the quantity supplied
Supply Curve
- The supply curve is the graph of the relationship between the price of a good and the quantity supplied.
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Change in Supply
- A shift in the supply curve, either to the left or right.
- Caused by a change in a determinant other than price.
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Surplus
- When price > equilibrium price, then quantity supplied > quantity demanded.
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Shortage
When price < equilibrium price, then quantity demanded > the quantity supplied.
- Suppliers want to make lots of the good
- Consumers don’t want to buy at that price.
- Suppliers reduce prices to try to move excess stock
- When the prices are lowered, consumer demand for that good increases.
- There is excess demand or a shortage.
- Suppliers will raise the price due to too many buyers chasing too few goods, thereby moving toward equilibrium.