Sunday, May 11, 2008

Supply vs. Quantity Supplied

INSERT DIAGRAM HERE.

It is extremely important to understand the difference between supply and quantity supplied.

Supply
• refers to the entire relationship between prices and the quantity of this product supplied at each of these prices.
• should be thought of as "the supply curve."

Quantity Supplied
• refers to one particular point on the supply curve (not the entire curve).
• refers to how much of the product is supplied at one particular price.
• is the horizontal distance between the vertical axis and the supply curve.


An increase in supply versus an increase in quantity supplied

With an increase in supply:
• the supply curve shifts to the right.
• at every possible price, a greater quantity is supplied.

An increase in supply might be caused by:
• an increase in the number of sellers.
• a reduction in the cost of inputs (such as labor or electricity).
• a technological innovation that increases output (such as the development of disease resistant crops).
• unusually good weather (for an agricultural product).
• expectations (e.g., that the price will be lower in the future).

With an increase in quantity supplied:
• the price of the product increases.
• there has been a movement from one point on the supply curve to another point (further to the right) on the same demand curve.

An increase in quantity supplied is caused by:
• an increase in the price of the product


A supply curve illustrates how much the quantity supplied changes when the price changes.

A change in quantity supplied is represented as a movement along a supply curve.

In the diagram below, there is an increase in the quantity supplied from two to four when the
price of a hamburger rises from $2 to $4. This is illustrated by the movement along the supply curve from point B’ to point D’.



Figure 8. An illustration of an increase in quantity supplied. There is a movement along the supply curve, but the supply curve does not shift. In this graph, there is a change is the quantity supplied, but supply does not change.

16 comments:

  1. this helped heappppssss
    thanks so much!

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  2. completely useless

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  3. Umm, wouldn't there be a decrease in Quantity Supplied if the price of a product increased because less people would be likely to purchase the product? Confused.

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    1. We talking about the supply-side here , not demand

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  4. No, because the relation must be based on price-quantity... not # buyers-quantity. and the higher the price of a product out there, the more able and willing producers will be to sell that product, as it's more profitable to producers; and thats why the quantity supplied will increase.

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  5. its really helpful for me... thank u

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  6. i dont understand pls elaborate more.....what will happen if the changes in quantity demanded versus quantity supply??

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  7. Thanks alot for this.... It helps me in my economics study.

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  8. Thanks so much for sharing your knowledge. You were very helpful!

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  9. Thanks much ......very useful

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  10. thanks for sharing those informations .. . it really helps me a lot .

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  11. "relation must be based on price-quantity... not # buyers-quantity" this word relieved my head ache it all makes sense now. I am glad I read further down :)

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  12. fuk thats so confusing zzz.

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