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Lecture

# Introduction to the Supply Curve Premium

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School
York University
Department
Economics
Course
ECON 1000
Professor
Kieran Furlong
Semester
Fall

Description
Microeconomics (ECON 1000) DAY 3 – September 13 th Supply - Supply = quantities of goods and services supplied by firms at every price ceteris paribus; relationship between 2 variables, price (P) and quantity ((Q) for the market, and (q) for the household), holding all other variables constant o Supply functions are upward sloping o Marginal cost concept = if the last unit of that thing is worth the cost of that thing o As price goes up, the firm produces more units, but only up to a certain amount  As the number of units increase, the cost per unit usually is higher o Cost per unit has to be less than how much you’re making off that unit  Example: If the wage is \$20, someone will work a number of hours that are worth less than \$20  Example: If the wage is \$20 and my hour is worth \$18, but I have to do an input of something worth \$3 (be it gas to drive there or whatever)  If there is a change in variable cost per unit, there is a shift in supply (it decreases) by that amount - Fixed cost = a cost that is constant, no matter the amount of units produced o This does not have an effect on determining the price of units  Example: If I produce 10 un
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