Economics
Short Run Supply Curve
The short run supply curve in economics represents the relationship between the price of a good or service and the quantity supplied by producers in the short term. It typically slopes upward, indicating that as the price increases, producers are willing to supply more of the good or service. This curve is influenced by factors such as production costs and technology.
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5 Key excerpts on "Short Run Supply Curve"
- Patil, J. V(Authors)
- 2021(Publication Date)
- Daya Publishing House(Publisher)
In very short run it is demand which determine price and in long run it is supply which determines prices. Thus, the factors which determine prices both demand and supply are important only their influence varies over different time periods. Of Reproducible goods (nonperishable) The goods can be preserved or kept back from market and carried over to next market period. The supply curve can not be straight line. If the price is very high the seller will prepared to sell the whole stock and at very low price level, seller would not sell any amount and wait for better price in another market/market period, i.e., Reserve price : The price below which a seller will refuse to sell is called the reserve price (RP). The reserve price will depend on several factors. Expectations regarding the future price - Higher RP in future Liquidity preference - more urgent need for cash lower RP Charges to for carrying stock-longer period/high charges lower will RP Future cost - If the costs are expected to fall RP will be lower. Durability of goods - the greater the durability higher is the RP. Too much importance attached to cost incurred in past and fix higher RP. Given two extreme price levels. 1. The seller prepared to sell whole stock. 2. He will refuse to sell any the amount which he will offer for sale will vary with price. The supply curve of seller will slope upwards to right. In short run, firm is in equilibrium at price equals marginal cost because fixed costs are disregarded in making decision to produce. It is average variable cost that determine to produce or not. If the price falls below AVC firm will shut down to minimize losses. Short Run Supply Curve of industry is the lateral summation of short run marginal cost curve (MCC) of the firms. The supply curve of the industry lies above minimum AVC and it slopes upward from left to right since MCC slopes upward.
eBook - PDFMicroeconomics
Theory and Applications
- Edgar K. Browning, Mark A. Zupan(Authors)
- 2019(Publication Date)
- Wiley(Publisher)
It generally slopes upward, indicating that a higher price will result in increased output. 3 In Chapter 9, however, we will see that supply curves for some products may be horizontal. Upward-sloping supply curves, however, are thought to be the most common shape, and we draw them this way here. 20 Chapter Two • Supply and Demand • Like the demand curve, the supply curve pertains to a particular period of time. In addition, different points on the supply curve refer to alternative possibilities for the same period of time. Finally, the number of firms producing the good may vary along the supply curve. At low prices some firms may halt production and leave the industry; at high prices new firms may enter the industry. Shifts in versus Movements along a Supply Curve The supply curve shows the influence of price on quantity supplied when other factors that also influence output are held constant. When any of the other factors change, the entire supply curve shifts. Beyond a good’s own price, two determinants of quantity supplied deserve special emphasis. First is the state of technological knowledge concerning the various ways a good can be manufactured. Second are the conditions of supply of inputs, like labor and energy, that are used to produce the good. Supply conditions for inputs relate to the prices that must be paid for their use. Other factors may be important in particular cases—for example, government in the case of health care, weather in the case of agriculture, and an organiza- tion’s goals in the case of nonprofit institutions like the Red Cross—but technology and input supply conditions influence all output markets. In drawing a supply curve, we assume that factors such as technological knowledge and input supply conditions do not vary along the curve. The supply curve shows how variation in price alone affects output. If technology or input supply conditions do change, the supply curve shifts.
- P. Hillebrandt(Author)
- 2000(Publication Date)
- Palgrave Macmillan(Publisher)
The short-run supply curve of the market will also be rising and will, as in the case of the individual firms, be considerably steeper than the long-run supply curve. 132 The Supply of Construction 12 Equilibrium in Various Market Situations It was shown at the beginning of Chapter 10 how the costs of the individual large contract, obtained at a single point in time but with work spread over a long period, are relevant to the usual cost curves of economic analysis which represent the answer to the question: If the output of the firm were higher or lower than a given level, what would be the effect on costs? The remainder of the chapter was devoted to a detailed consideration of this question. By an analysis almost identical to that for costs, the revenue obtained from individual projects may be transformed into revenue over time, and then consideration be given to the likely difference in revenue at a point in time if the output had been larger or smaller than a given level. This is the demand curve of the firm. It is dependent, on the one hand, on the demand curve of the indus- try or market under consideration and, on the other hand, on the position of the individual firm in the market in question. The first was discussed in the demand section of this book, in Chapters 4–8. The second requires a preliminary general investigation of the vari- ous theoretical types of market situation, because the demand curve of the individual firm in some conditions, notably oligopoly and discriminating monopoly, cannot be understood without reference to the analysis of both demand and supply. This is the subject of the present chapter. In Chapter 13 consideration is given to the place of the construction firm in various markets on the theoretical range from perfect competition to monopoly.
eBook - PDFMacroeconomics
A Contemporary Introduction
- William A. McEachern(Author)
- 2016(Publication Date)
- Cengage Learning EMEA(Publisher)
Short-Run Aggregate Supply In the short run, prices may rise faster than costs. This chapter discusses why this might happen. Suppose that labor and management agree to adjust wages continuously for any changes in the price level. How would such adjustments affect the slope of the aggregate supply curve? 2. Potential Output Define the economy’s potential output. What factors help determine potential output? 3. Actual Price Level Higher than Expected Discuss some instances in your life when your actual production for short periods exceeded what you considered your potential, or normal, production. Why does this occur only for brief periods? 4. Nominal and Real Wages Complete each of the following sentences: a. The _______ wage measures the wage rate in dollars of the year in question, while the _______ wage measures it in con- stant dollars. b. Wage agreements are based on the _______ price level and negotiated in _______ terms. Real wages are then deter- mined by the _______ price level. c. The higher the actual price level, the _______ is the real wage for a given nominal wage. d. If nominal wages are growing at 2 percent per year while the annual inflation rate is 3 percent, then real wages change by _______. 5. Recessionary Gaps After reviewing Exhibit 3 in this chapter, explain why recessionary gaps occur only in the short run and only when the actual price level is below what was expected. 6. Short-Run Aggregate Supply In interpreting the short-run aggregate supply curve, what does the adjective short-run mean? Explain the role of labor contracts along the SRAS curve. 7. Recessionary Gap What does a recessionary gap imply about the actual rate of unemployment relative to the natural rate? What does it imply about the actual price level relative to the expected price level? What must happen to real and nominal wages in order to close a recessionary gap? 8.
eBook - PDF- Rhona C. Free(Author)
- 2010(Publication Date)
- SAGE Publications, Inc(Publisher)
Likewise, sellers who are able but unwilling are also not considered to be part of market supply. Quantity supplied is defined to be the amount of a prod-uct that sellers are both willing and able to provide to the market at a specific price. The difference in these two concepts is similar to the difference between demand and quantity demanded. That is, supply refers to the entire supply relationship, while quantity supplied refers to a single price and quantity combination. Once these two concepts are understood, it becomes possible to state the law of supply. According to the law of sup-ply, as price increases, sellers increase the quantity that they are willing and able to provide to the market. If price decreases, sellers decrease the quantity that they are willing and able to provide to the market. The lines labeled 5, and S 2 in Figure 7.2 are referred to as supply curves. The lines are drawn here as linear functions to enhance the simplicity of the graph, but these lines could also be drawn as curved lines that are convex to the origin. A change in supply is illustrated by a shift in the loca-tion of the entire curve. In Figure 7.2, supply is said to increase if supply changes from S, to S 2 . An increase in supply means that sellers are willing and able to sell more at every price. For example, the movement from point Ε to G represents an increase in supply because at point E, sell-ers are willing to sell Q but Q 4 at point G. This increase v in willingness to sell occurs even though the price remains unchanged at P A decrease in supply means the sellers are v willing and able to sell less at every price and is illustrated by a shift in demand from S 2 to 5,. A change in quantity supplied is illustrated by a move along the curve. In Figure 7.2, an increase in quantity supplied is illustrated by a move-ment from point F to G.
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