2. Supply = the amount of goods generally available

3. Law of Supply – firms are willing to produce more as the price goes up They can make bigger profits – firms are not willing to produce as much as the price goes down They don’t make as much profit

4. Quantity Supplied – what the producers are able to produce at a certain price – what the producers are willing to produce at a certain price

5. Methods to Increase Supply – Higher Production existing firms increase output get more profit – Market Entry new firms enter the market they want to get some of those profits

6. it looks like a chart shows what a firm is willing to produce when considering – price – quantity sold

7. Types – individual supply schedule what a single business is willing to supply at different prices – market supply schedule what ALL of the businesses are willing to supply at different prices

8. it looks like a graph it gets its data from a supply schedule

9. axes – vertical always is Price always rises from 0 to highest price – horizontal always is Quantity always has zero at left and highest price at right – slope shows the Law of Supply rises from left to right

10. measures how people react to change in prices if reaction is extreme, it is elastic if reaction is slight, it is inelastic

11. how time effects reactions – inelastic supply in SHORT TERM, but can react in LONG TERM agriculture – must plant more – must wait for plants to begin to produce big businesses (like car manufacturing) – must get new technology and training – must wait for new factories to be built

12. – elastic in SHORT TERM small businesses service industry – less capital needed to expand – less capital needed to enter the market