Market Supply

This refers to the quantity of a good that the producer plans to sell in the market.

· As price increases firms have an incentive to supply more because they get extra revenue (income) from selling the goods.

· If price changes, there is a movement along the supply curve, e.g. a
higher price causes a higher amount to be supplied.

Shifts in the Supply curve:

An increase in supply occurs when more is supplied at each price, this could occur for the following reasons:

Diagram increase in Supply

supply

1. An decrease in Costs of Production, this means business can supply more at each price, lower costs could be due to lower wages, lower raw material costs

2. An increase in the number of producers will cause an increase in supply

3. Expansion in capacity of existing firms, e.g. building a new factory

4. An increase in Supply of a related good e.g. beef and leather

5. Climatic conditions are very important for agricultural products

6. Improvements in technology, e.g. computers

7. Lower taxes reduce the cost of goods

8. Increase in govt subsidies will also reduce cost of goods

Definition: Joint Supply: Joint supply occurs when two goods are supplied together. E.g. If you produce beef you will get leather as a side effect.

Market Supply

Shifts in the Supply curve:

Diagram increase in Supply

Essays and Revision Notes on Supply and Demand

Elasticity