The quantity supplied of any good is the amount that sellers are willing and able to sell.
Law of supply: the claim that the quantity supplied of a good rises when the price of the good
rises, other things equal
A table that shows the relationship between the price of a good and the quantity supplied.
Starbucks’ supply of lattes.
Notice that Starbucks’ supply schedule obeys the
Law of Supply.
of lattes of lattes supplied
6.00 18 Market Supply versus Individual Supply
The quantity supplied in the market is the sum of
the quantities supplied by all sellers at each price.
Suppose Starbucks and Jitters are the only two sellers in this market. (Q = quantity supplied)
Supply Curve Shifters:
The supply curve shows how price affects quantity supplied, other things being equal.
These “other things” are non-price determinants of supply.
Changes in them shift the S curve…
Supply Curve Shifters: Input Prices
Examples of input prices:
wages, prices of raw materials.
A fall in input prices makes production
more profitable at each output price,
so firms supply a larger quantity at each price,
and the S curve shifts to the right.
Technology determines how much