Chapter 5.1
Supply is the willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period
The law of supply states that as the price of a good increases, the quantity supplied of the good increases, and as the price of a good decreases, the quantity supplied of the good decreases Law of Supply: If P then Q s If P then Q s Where P = price and Q s = quantity supplied EOC study guide Supply & Demand #5
Law of Supply: If P then Qs If P then Qs Law of Demand: If P then Q d If P then Q d
Remember: “supply” refers to the entire line! Quantity supplied refers to the number of units of a good produced and offered for sale at a specific price ◦ “quantity supplied” refers to an amount on the line!
A firm’s supply curve is what it sounds like: it is the supply curve for a particular business (firm) A market supply curve is the sum of all business’ supply curves
The law of supply, which holds that as price rises, quantity supplied rises, does not hold true for all goods; nor does it hold true over all time periods ◦ Goods that cannot be produced anymore—Antonio Stradivai’s violins ◦ Sold out concerts ◦ Beachfront property S P Q Q1Q1 P1P1 P2P2 Q changes by 0% P rises by 10%