Economics
Supply Curve Slope
The supply curve slope represents the relationship between the price of a good or service and the quantity supplied by producers. A positive slope indicates that as the price increases, the quantity supplied also increases, reflecting the law of supply. The slope of the supply curve is influenced by factors such as production costs, technology, and resource availability.
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12 Key excerpts on "Supply Curve Slope"
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.
eBook - PDF- Colin Harbury(Author)
- 2014(Publication Date)
- Pergamon(Publisher)
For normal goods the income and substitution effects work in the same direction. In the case of an inferior good, the substitution effect is usually expected to more than offset the income effect, so that demand curves normally slope downwards. Where this is not the case the good is described as a 'Giffen good'. The SUPPLY of a commodity is, like demand, related to a number of different factors. The SUPPLY SCHEDULE and SUPPLY CURVE show the amounts of a commodity which potential sellers, referred to variously as PRODUCERS, BUSINESSES, FIRMS or SUPPLIERS, are prepared to offer for sale at different prices during a given period of time. Supply curves often tend to slope upwards, i.e. sellers offer larger amounts for sale at high prices than at low ones. Supply, however, is strongly affected by costs of production, the state of technology, the form of business organization and the type of market in which the firm is operating. These may be called CONDITIONS OF SUPPLY, and are dealt with in the next chapter. The responsiveness of demand and supply to price changes differs from one commodity to another. The measure of responsiveness used by economists is known as the coefficient of ELASTICITY, defined as the percentage (or proportionate) change in quantity divided by the determining percentage (or proportionate) change in price. The numerical value of this ratio normally varies between zero and infinity. It is useful to distinguish three limiting cases of elasticity with the values of 0, 1 and infinity. Where the ELASTICITY OF DEMAND equals 1 (or unity), the percentage changes in price and quantity are the same; a rise or fall in price does not affect total revenue (price times quantity) or the receipts of the seller. When the value exceeds unity, demand is said to be elastic; a change in price changes total revenue in the opposite direction to the change in price.
eBook - PDFMicroeconomics
A Contemporary Introduction
- William A. McEachern(Author)
- 2016(Publication Date)
- Cengage Learning EMEA(Publisher)
Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. 88 Part 1 Introduction to Economics 5. The Supply Curve Slopes upward because higher prices make producers (a) more willing to supply this good rather than sup-ply other goods that use many of the same resources and (b) more able to cover the higher marginal cost associated with greater output rates. 6. Assumed to remain constant along a supply curve are (a) the state of technology and know-how; (b) prices of resources used to produce the good; (c) prices of other goods that could be produced with these resources; (d) supplier expectations; and (e) the number of producers in this market. A change in any of these could shift, or change, the supply curve. 7. Demand and supply come together in the market for the good. A market provides information about the price, quantity, and qual-ity of the good. In doing so, a market reduces the transaction costs of exchange—the costs of time and information required for buyers and sellers to make a deal. The interaction of demand and supply guides resources and products to their highest-valued use. 8. Impersonal market forces reconcile the personal and inde-pendent plans of buyers and sellers. Market equilibrium, once established, will continue unless there is a change in a determinant that shapes demand or supply. Disequilibrium is usually temporary while markets seek equilibrium, but some-times disequilibrium lasts a while, such as when government regulates the price. 9. A price floor is the minimum legal price below which a particu-lar good or service cannot be sold.
- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
A demand curve shows the relationship between quantity demanded and price in a given market on a graph. The law of demand states that a higher price typically leads to a lower quantity demanded. A supply schedule is a table that shows the quantity supplied at different prices in the market. A supply curve shows the relationship between quantity supplied and price on a graph. The law of supply says that a higher price typically leads to a higher quantity supplied. The equilibrium price and equilibrium quantity occur where the supply and demand curves cross. The equilibrium occurs where the quantity demanded is equal to the quantity supplied. If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. Excess demand or a shortage will exist. If the price is above the equilibrium level, then the quantity supplied will exceed the quantity demanded. Excess supply or a surplus will exist. In either case, economic pressures will push the price toward the equilibrium level. 3.2 Shifts in Demand and Supply for Goods and Services Economists often use the ceteris paribus or “other things being equal” assumption: while examining the economic impact of one event, all other factors remain unchanged for analysis purposes. Factors that can shift the demand curve for goods and services, causing a different quantity to be demanded at any given price, include changes in tastes, population, income, prices of substitute or complement goods, and expectations about future conditions and prices. Factors that can shift the supply curve for goods and services, causing a different quantity to be supplied at any given price, include input prices, natural conditions, changes in technology, and government taxes, regulations, or subsidies. 76 Chapter 3 | Demand and Supply This OpenStax book is available for free at http://cnx.org/content/col23729/1.3
eBook - PDF- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
A demand curve shows the relationship between quantity demanded and price in a given market on a graph. The law of demand states that a higher price typically leads to a lower quantity demanded. A supply schedule is a table that shows the quantity supplied at different prices in the market. A supply curve shows the relationship between quantity supplied and price on a graph. The law of supply says that a higher price typically leads to a higher quantity supplied. The equilibrium price and equilibrium quantity occur where the supply and demand curves cross. The equilibrium occurs where the quantity demanded is equal to the quantity supplied. If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. Excess demand or a shortage will exist. If the price is above the equilibrium level, then the quantity supplied will exceed the quantity demanded. Excess supply or a surplus will exist. In either case, economic pressures will push the price toward the equilibrium level. 3.2 Shifts in Demand and Supply for Goods and Services Economists often use the ceteris paribus or “other things being equal” assumption: while examining the economic impact of one event, all other factors remain unchanged for analysis purposes. Factors that can shift the demand curve for goods and services, causing a different quantity to be demanded at any given price, include changes in tastes, population, income, prices of substitute or complement goods, and expectations about future conditions and prices. Factors that can shift the supply curve for goods and services, causing a different quantity to be supplied at any given price, include input prices, natural conditions, changes in technology, and government taxes, regulations, or subsidies. 76 Chapter 3 | Demand and Supply This OpenStax book is available for free at http://cnx.org/content/col12190/1.4
eBook - PDF- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
A demand curve shows the relationship between quantity demanded and price in a given market on a graph. The law of demand states that a higher price typically leads to a lower quantity demanded. A supply schedule is a table that shows the quantity supplied at different prices in the market. A supply curve shows the relationship between quantity supplied and price on a graph. The law of supply says that a higher price typically leads to a higher quantity supplied. The equilibrium price and equilibrium quantity occur where the supply and demand curves cross. The equilibrium occurs where the quantity demanded is equal to the quantity supplied. If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. Excess demand or a shortage will exist. If the price is above the equilibrium level, then the quantity supplied will exceed the quantity demanded. Excess supply or a surplus will exist. In either case, economic pressures will push the price toward the equilibrium level. 3.2 Shifts in Demand and Supply for Goods and Services Economists often use the ceteris paribus or “other things being equal” assumption: while examining the economic impact of one event, all other factors remain unchanged for analysis purposes. Factors that can shift the demand curve for goods and services, causing a different quantity to be demanded at any given price, include changes in tastes, population, income, prices of substitute or complement goods, and expectations about future conditions and prices. Factors that can shift the supply curve for goods and services, causing a different quantity to be supplied at any given price, include input prices, natural conditions, changes in technology, and government taxes, regulations, or subsidies. 76 Chapter 3 | Demand and Supply This OpenStax book is available for free at http://cnx.org/content/col12170/1.7
eBook - PDF- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
A demand curve shows the relationship between quantity demanded and price in a given market on a graph. The law of demand states that a higher price typically leads to a lower quantity demanded. A supply schedule is a table that shows the quantity supplied at different prices in the market. A supply curve shows the relationship between quantity supplied and price on a graph. The law of supply says that a higher price typically leads to a higher quantity supplied. The equilibrium price and equilibrium quantity occur where the supply and demand curves cross. The equilibrium occurs where the quantity demanded is equal to the quantity supplied. If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. Excess demand or a shortage will exist. If the price is above the equilibrium level, then the quantity supplied will exceed the quantity demanded. Excess supply or a surplus will exist. In either case, economic pressures will push the price toward the equilibrium level. 3.2 Shifts in Demand and Supply for Goods and Services Economists often use the ceteris paribus or “other things being equal” assumption: while examining the economic impact of one event, all other factors remain unchanged for analysis purposes. Factors that can shift the demand curve for goods and services, causing a different quantity to be demanded at any given price, include changes in tastes, population, income, prices of substitute or complement goods, and expectations about future conditions and prices. Factors that can shift the supply curve for goods and services, causing a different quantity to be supplied at any given price, include input prices, natural conditions, changes in technology, and government taxes, regulations, or subsidies. 76 Chapter 3 | Demand and Supply This OpenStax book is available for free at http://cnx.org/content/col12122/1.4
eBook - PDF- David Shapiro, Daniel MacDonald, Steven A. Greenlaw(Authors)
- 2022(Publication Date)
- Openstax(Publisher)
demand social surplus the sum of consumer surplus and producer surplus substitute a good that can replace another to some extent, so that greater consumption of one good can mean less of the other supply the relationship between price and the quantity supplied of a certain good or service supply curve a line that shows the relationship between price and quantity supplied on a graph, with quantity supplied on the horizontal axis and price on the vertical axis supply schedule a table that shows a range of prices for a good or service and the quantity supplied at each price surplus at the existing price, quantity supplied exceeds the quantity demanded; also called excess supply total surplus see social surplus Key Concepts and Summary 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services A demand schedule is a table that shows the quantity demanded at different prices in the market. A demand curve shows the relationship between quantity demanded and price in a given market on a graph. The law of demand states that a higher price typically leads to a lower quantity demanded. A supply schedule is a table that shows the quantity supplied at different prices in the market. A supply curve shows the relationship between quantity supplied and price on a graph. The law of supply says that a higher price typically leads to a higher quantity supplied. The equilibrium price and equilibrium quantity occur where the supply and demand curves cross. The equilibrium occurs where the quantity demanded is equal to the quantity supplied. If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. Excess demand or a shortage will exist. If the price is above the equilibrium level, then the quantity supplied will exceed the quantity demanded. Excess supply or a surplus will exist. In either case, economic pressures will push the price toward the equilibrium level.
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.
eBook - PDFEconomics for Investment Decision Makers
Micro, Macro, and International Economics
- Christopher D. Piros, Jerald E. Pinto(Authors)
- 2013(Publication Date)
- Wiley(Publisher)
It is the difference between the total revenue sellers receive from selling a given amount of a good, on the one hand, and the total variable cost of producing that amount, on the other hand. Variable costs are those costs that change when the level of output changes. Total revenue is simply the total quantity sold multiplied by the price per unit. The total variable cost (variable cost per unit times units produced) is measured by the area beneath the supply curve, and it is a little more complicated to understand. Recall that the supply curve represents the lowest price that sellers would be willing to accept for each additional unit of a good. In general, that amount is the cost of producing that next unit, called marginal cost. Clearly, a seller would never intend to sell a unit of a good for a price lower than its marginal cost, because the seller would lose money on that unit. Alternatively, a producer should be more than willing to sell that unit for a price that is higher than its marginal cost, because it would contribute something toward fixed cost and profit, and obviously the higher the price the better for the seller. Hence, we can interpret the marginal cost curve as the lowest price sellers would accept for each quantity, which basically means that the marginal cost curve is the supply curve of any competitive seller. The market supply curve is simply the aggregation of all sellers’ individual supply curves, as we showed in section 3.5. Marginal cost curves are likely to have positive slopes. (It is the logical result of the law of diminishing marginal product, which will be discussed in a later chapter.) In Exhibit 1-13, we see EXAMPLE 1-9 Calculating Consumer Surplus A market demand function is given by the equation Q d ¼ 180 2P. Determine the value of consumer surplus if price is equal to 65. Solution: First, insert 65 into the demand function to find the quantity demanded at that price: Q d ¼ 180 2 (65) ¼ 50.
eBook - PDF- Thomas E. Getzen, Michael S. Kobernick(Authors)
- 2022(Publication Date)
- Wiley(Publisher)
If a procedure is painful, a patient’s willingness to undergo it may convince the provider that the patient needs services, but the pain does not yield pleasure to the provider. The patient’s time and pain is a personal cost that does not directly benefit the provider. While every dollar spent on medicine by one person is income to someone else, con- tributing to GDP, there is no “circular flow of time” or “circular flow of pain.” Economists tend to favor money prices as a rationing mechanism because they entail fewer such “dead weight” costs (waste) that provide no revenue or benefit to the supplier. 2.5 Inputs and Production Functions The economic concept of supply is always that of a supply curve, emphasizing change, focusing on how firms will vary the amount supplied as price increases or decreases. The supply curve also relies on the ceteris paribus assumption, implicitly holding many factors constant that are not being talked about. Just as the demand curve is a marginal benefit curve, showing how people in the market are willing to pay for one more unit of a good, under perfect competition the supply curve is a marginal cost curve, showing how much must be paid to induce firms in the market to supply one more unit. 4 Production Functions A table or formula showing exactly how much is produced with any possible combination of inputs is called a production function. Often the full set of relationships is so complex that only a few basic results—such as the formula below—are important in practice. Yet the concept of a production function provides a way of thinking about the economics of the situation even when quantification is imprecise and uncertain. Athletes, architects, financial firms, and drug manufacturers all try to utilize inputs in the best way possible—and doing so leads them to show the kind of behavior that economics analyzes.
eBook - PDF- Neva Goodwin, Jonathan M. Harris, Julie A. Nelson, Brian Roach, Mariano Torras, Jonathan Harris, Julie Nelson(Authors)
- 2019(Publication Date)
- Routledge(Publisher)
We can present our results as shown in Table 4.1. We call a table representing the relationship between price and the quantity supplied a supply schedule . In the case of coffee, we have the supply schedule for a physical good. But we can also think of a supply schedule for a marketed service, such as house-cleaning, babysitting, or a college education. As we expect, the quantity of coffee supplied increases with higher prices. For example, at a rela-tively low price of $0.80 per cup, only 400 cups are supplied per week in our market area. But if the price rises to $1.00 per cup, then 600 cups are supplied. Note that Table 4.1 shows only the cups sup-plied at $0.10 increments. We can interpolate to estimate, for example, that 550 cups would be supplied at a price of $0.95 per cup. 7 From a supply schedule, we can graph a supply curve , as shown in Figure 4.1. This is simply the same relationship between price and quantity supplied in graphical form. It is standard in economics to place the quantity on the horizontal axis (also called the x -axis) and the price on the vertical axis (also called the y -axis). We see, for example, that at a price of $1.00 per cup, coffee sellers are willing to supply 600 cups of coffee per week. Note that the supply curve in Figure 4.1 slopes upward. This is another illustration of a positive rela-tionship —as price goes up, the quantity supplied also goes up.
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