Is the amount of a service or good that producers are willing and able to sell at a specific time?
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If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. Recommended textbook solutionsPrinciples of Economics7th EditionN. Gregory Mankiw 1,394 solutions Principles of Economics8th EditionN. Gregory Mankiw 1,335 solutions Fundamentals of Engineering Economic Analysis1st EditionDavid Besanko, Mark Shanley, Scott Schaefer 215 solutions
Century 21 Accounting: General Journal11th EditionClaudia Bienias Gilbertson, Debra Gentene, Mark W Lehman 1,009 solutions What Is the Law of Supply?The law of supply is the microeconomic law that states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa. The law of supply says that as the price of an item goes up, suppliers will attempt to maximize their profits by increasing the number of items for sale. Key Takeaways
Law of SupplyUnderstanding the Law of SupplyThe chart below depicts the law of supply using a supply curve, which is upward sloping. A, B, and C are points on the supply curve. Each point on the curve reflects a direct correlation between quantity supplied (Q) and price (P). So, at point A, the quantity supplied will be Q1 and the price will be P1, and so on. Investopedia / Julie Bang The supply curve is upward sloping because, over time, suppliers can choose how much of their goods to produce and later bring to market. At any given point in time, however, the supply that sellers bring to market is fixed, and sellers simply face a decision to either sell or withhold their stock from a sale; consumer demand sets the price, and sellers can only charge what the market will bear. If consumer demand rises over time, the price will rise, and suppliers can choose to devote new resources to production (or new suppliers can enter the market), which increases the quantity supplied. Demand ultimately sets the price in a competitive market; supplier response to the price they can expect to receive sets the quantity supplied. The law of supply is one of the most fundamental concepts in economics. It works with the law of demand to explain how market economies allocate resources and determine the prices of goods and services. British economist Alfred Marshall (1842-1924), a specialist in microeconomics, contributed significantly to supply theory, especially in his pioneering use of the supply curve. He emphasized that the price and output of a good are determined by both supply and demand: The two curves are like scissor blades that intersect at equilibrium. Examples of the Law of SupplyThe law of supply summarizes the effect price changes have on producer behavior. For example, a business will make more video game systems if the price of those systems increases. The opposite is true if the price of video game systems decreases. The company might supply 1 million systems if the price is $200 each, but if the price increases to $300, they might supply 1.5 million systems. To further illustrate this concept, consider how gas prices work. When the price of gasoline rises, it encourages profit-seeking firms to take several actions: expand exploration for oil reserves; drill for more oil; invest in more pipelines and oil tankers to bring the oil to plants where it can be refined into gasoline; build new oil refineries; purchase additional pipelines and trucks to ship the gasoline to gas stations; and open more gas stations or keep existing gas stations open longer hours. The law of supply is so intuitive that you may not even be aware of all the examples around you:
What Is a Good Example of the Law of Supply?The law of supply summarizes the effect price changes have on a producer's behavior. For example, a business will make more of a
good (such as TVs or cars) if the price of that product increases. So, if the price of TVs increases, TV producers are incentivized to produce more of them. Likewise, other companies may be induced to start producing TVs. This will increase the overall supply of televisions in the market. At some point, the abundant supply will tend to cause prices to moderate and fall. What Are the Types of Law of Supply?There are five types of
supply—market supply, short-term supply, long-term supply, joint supply, and composite supply. Meanwhile, there are two types of supply curves—individual supply curves and market supply curves. Individual supply curves graph the individual supply schedule, while market supply curves represent the market supply schedule. What Factors Affect Supply?Supply is influenced by prices and consumer demand. In addition, the number of suppliers available, the level of competition, the state of technology, and the presence of government support or restriction will play important roles. For certain products like agricultural commodities, supply is also impacted by things like weather and crop yields. What Is the Law of Demand?The law of demand is a fundamental principle of economics that states that at a higher price consumers will demand a lower quantity of a good, and vice-versa. What Is Supply and Demand?The
law of supply and demand outlines the interaction between a buyer and a seller of a resource. Supply and demand says that sellers will supply less of a product or resource as price decreases, while buyers will buy more, and vice versa, until an equilibrium price and quantity is reached. It incorporates both the law of
supply and the law of demand. Is the quantity of a good or service that producers are willing and able to sell at various prices?Chapter 7-8. Is the amount of a good or service that producers are willing and able to offer for sale at each possible price during a given period of time?Supply-a schedule or a curve showing the amounts of a product a producer is willing and able to produce and make available for sale at each of a series of possible prices during a specific period of time.
What refers to the quantity of a good or service that producers are willing and able to sell during a certain period under a given set of conditions?Quantity Supplied Under Regular Market Conditions
The supply curve is upward-sloping because producers are willing to supply more of a good at a higher price.
Is the amount of a service or good that consumers are able and willing to purchase at a specific time?Economists use the term demand to refer to the amount of some good or service consumers are willing and able to purchase at each price. Demand is based on needs and wants—a consumer may be able to differentiate between a need and a want, but from an economist's perspective they are the same thing.
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