ECON 1050 Chapter 3: Economics-1 (1) (dragged) 3
17 Sep 2016
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The law of supply results from the general tendency for the marginal cost of producing a good service to increase as the quantity produced increases. Producers are willing to supply a good only if they can at least cover their marginal cost of production. The term supply refers to the entire relationship between the quantity supplied and the price of a good. The supply curve shows the relationship between the quantity supplied of a good and its price when all other influences on producers" planned sales remain the same. The figure below shows a supply curve of energy bars. A rise in the price, other things remaining the same, brings an increase in the quantity supplied. A supply curve is also a a minimum-supply-price curve. As the quantity produced increases, marginal cost increases. The lowest price at which someone is willing to sell an additional unit rises.
