The law of supply
- Explain the positive causal relationship between price and quantity supplied.
- Describe the relationship between an individual producer’s supply and market supply.
- Explain that a supply curve represents the relationship between the price and the quantity supplied of a product, ceteris paribus.
- Draw a supply curve.
- Explain how factors including changes in costs of factors of production (land, labour, capital and entrepreneurship), technology, prices of related goods (joint/competitive supply), expectations, indirect taxes and subsidies and the number of firms in the market can change supply.
- Distinguish between movements along the supply curve and shifts of the supply curve.
- Construct diagrams to show the difference between movements along the supply curve and shifts of the supply curve.
- Explain a supply function (equation) of the form Qs = c + dP.
- Plot a supply curve from a linear function (eg, Qs = –30 + 20 P).
- Identify the slope of the supply curve as the slope of the supply function Qs = c + dP, that is d (the coefficient of P).
- Outline why, if the “c” term changes, there will be a shift of the supply curve.
- Outline how a change in “d” affects the steepness of the supply curve.
As we watch the video, you will be answering questions on a Google Form which can be found here.
Now that we've done demand, supply should be easy as we are dealing with the same things but from the producer's point of view rather than the consumer... and you have to know/do the same things - the law of supply (hint: it's the opposite of the law of demand!), draw a supply curve, distinguish between a movement along the supply curve (because price changes) and a movement of the supply curve (when something other than price changes.... the ceteris paribus conditions), and be able to explain and use linear supply functions.
There are some videos on calculating/using linear supply functions here if you would like further review.
Once again, you will be given a couple of handouts with some tasks to do to fulfill these objectives... and there will be a test!