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Model of Supply
Model of Supply
SUPPLY DEFINED
The amount of a good or service a firm wants to
sell, and is able to sell per unit time.
own supply
price
quantity supplied
pizza MARKET
Supply(From the desk of Ms Imrana slide 6
Bano)
The supply curve means:
You pick a price, such a p0, and the supply curve shows
how much is supplied.
own
supply
price
p0
quantity supplied
Q0
pizza MARKET
Supply(From the desk of Ms Imrana slide 7
Bano)
If the price of pizza rises, how is
the supply curve affected?
own supply
price
p0
quantity supplied
Q0
pizza MARKET
own
supply
price
phigher
p0
quantity supplied
Q0 Q1
pizza MARKET
Supply(From the desk of Ms Imrana slide 9
Bano)
AN IMPORTANT POINT
quantity
pepsi MARKET
Supply(From the desk of Ms Imrana Go to hidden slide slide 14
Bano)
This is a change in supply. pepsi firms
want to sell more pepsi at each price of
pepsi.
supply @ hops
price of $100/ton
quantity
pepsi MARKET
Supply(From the desk of Ms Imrana slide 15
Bano)
Change in technology
An improvement in technology makes it
possible to produce a level of output with
fewer inputs than before.
Because this lowers the cost of production,
profits rise, and firms will try to supply
more.
quantity
pepsi MARKET
Supply(From the desk of Ms Imrana Go to hidden slide slide 17
Bano)
There is an increase in supply. The supply
curve shifts to the right
supply @
improved
technology
quantity
pepsi MARKET
Supply(From the desk of Ms Imrana slide 18
Bano)
How would you suspect an excise tax affects
the supply of a good?
price
S (no tax)
Q
Supply(From the desk of Ms Imrana Go to hidden slide slide 19
Bano)
How would you suspect an excise tax
affects the supply of a good?
price
S (with excise tax)
S (no tax)