BSEN 401 Lecture Notes - Ceteris Paribus, Opportunity Cost, Economic Equilibrium

• School: University of Calgary
• Department: Business and Environment
• Course: BSEN 401
• Professor: William Huddleston

Document Summary

Definition: supply is the quantities of goods and services supplied by firms at every price ceteris paribus. Supply is the relationship between 2 variables, price (p) and quantity supplied (q for the firm and q for the industry, the sum of the firms), holding all other variables constant. The most important of the ceteris paribus conditions are the length of the supply period, the costs of inputs into production, the prices of other goods (pi where i" represents one of n commodities), and technology. We can express the supply for the x commodity as. S(qx or qx): qx or qx = f(px inputs costs, pi, time period, technology) Note: supply is defined for quantity supplied in response to price not vice versa. Supply is therefore a competitive concept so that monopolies, for example, do not have supply functions. Law of supply: quantity supplied is positively related to price.