Supply and Demand
The Heart & Soul of Market Economics
Supply
• The quantity of a product or service that a firm is willing
and able to sell at various prices
Law of Supply
Price increases
Qty Supplied increases
Positive Relationship
Supply and Demand
in Action
The Motion of a “Free Market”
Supply Changes
• There are also 2 types of Supply changes:
1) Change in Quantity Supplied
or
2) Change in Supply
Change in Quantity Supplied
• When price changes => Qty Supplied Changes
•A shift along the existing supply curve
Change in Supply
• A Change in Supply leads to a SHIFT in Supply
Curve (new supply curve)
• A shift occurs whenever a Determinant of
Supply changes
Determinants of Supply
(TIN)
• Technology
• Input Costs
• Number of Sellers
Change in Supply
Change in (TIN)
Input Costs Rise