Microeconomic principles: Supply

2.3 Supply

Activity

Principles of Microeconomics: "Chapter 3, Section 2: Supply"

• Read this section to learn about the theory of supply. Attempt the "Try It" problem. Use the data from the text to practice drawing the supply curve on your own, either on paper or in Excel. Take a moment to read through the stated learning outcomes for this chapter of the text, which you can find at the beginning of each section. These outcomes should be your goals as you read through the chapter.

Khan Academy: "Law of Supply"

• Watch this video about the law of supply.

The supply curve

The supply curve is a mirror reflection of the demand curve. You should recognize that the supply curve operates from the firm's point of view, such that if a product is highly priced, the firm will want to supply more of it. As such, it is a positively sloped curve indicating the positive relationship between price of the good and quantity supplied.

Changes in supply

The demand curve is similar to the supply curve in that an increase in supply refers to a rightward shift of the curve and signifies that there will be a larger quantity of the good than before; a decrease in supply refers to a leftward shift of the curve and signifies that there will be a lesser quantity of the good than before. This section will present the three principal factors that shift the supply curve: changes in input prices, changes in technology, and changes in expectations.

Activity

Khan Academy: "Factors Affecting Supply"

• Watch this video about the factors affecting supply.