Demand and Supply
- Define the quantity supplied of a good or service and illustrate it using a supply schedule and a supply curve.
- Distinguish between the following pairs of concepts: supply and quantity supplied, supply schedule and supply curve, movement along and shift in a supply curve.
- Identify supply shifters and determine whether a change in a supply shifter causes the supply curve to shift to the right or to the left.
What determines the quantity of a good or service sellers are willing to offer for sale? Price is one factor; ceteris paribus, a higher price is likely to induce sellers to offer a greater quantity of a good or service. Production cost is another determinant of supply. Variables that affect production cost include the prices of factors used to produce the good or service, returns from alternative activities, technology, the expectations of sellers, and natural events such as weather changes. Still another factor affecting the quantity of a good that will be offered for sale is the number of sellers - the greater the number of sellers of a particular good or service, the greater will be the quantity offered at any price per time period.