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Pondelok, 21. augusta 2017
Dátum pridania:14.01.2008Oznámkuj:12345
Autor referátu:Darylll
Jazyk:AngličtinaPočet slov:1 216
Referát vhodný pre:GymnáziumPočet A4:3.8
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Supply- side factors, law of Supply, affecting factors and equilibrium point

Supply- refers to the amount of a good or service firms or producers are willing to make and sell at a number of possible prices.
The amount of a good or service producers are willing an able to make and sell to consumers in the market is known as the quantity supplied of that product, measured per period of time, for examaple each week, month or year.

For example a firm interested in profit will only make and sell a product if it can do so at a price over and above what it cost the firm to make. The higher the price of the product is, the more the firm will supply because the more profits it expects to make. This can be told about all of goods and services. As price rises, quantity supplied rises.

Law of supply

The law of supply can be approached from two different contexts. The first is that it represents the sum total of production plus carryover stocks. The other context for supply describes the behaviour of producers. The market or total supply represents the quantities producers are willing to sell over a range of prices for any given time period. At the individual level, you may be willing to produce a given product as long as the market price is equal to or greater than the cost of producing that product. The total supply is the sum of the individual quantities of product that each farmer brings to the market.

Market supply is represented by an upward sloping curve with price on the vertical axis and quantity on the horizontal axis .

An increase in price in most instances will result in farmers wanting to increase the quantity of a given product they will bring to the market, therefore the relationship between the price and supply is positive.

With higher prices the producers of goods and services will receive greater profits. Greater profits will result in the means to expand production increasing the supply. This increased supply will ultimately satisfy the existing demand such that any additional production must be met with new demand in order for the price increases to be sustained. The firms which handle your grain or livestock products are not free to set prices as they choose. They can raise prices only if consumers are willing and able to pay more. The law of supply, as was the case with demand, illustrates the discipline of the marketplace. The market doesn’t care what it costs you to produce something. Lower prices are the market’s signal to farmers that they have produced too much of something or that it is something consumers do not want.

Numerically a supply schedule would look like this:
Supply Schedule for Cookies
At a price of Sellers will offer
.70 cents2,000 cookies

There are TWO types of change in supply;

1. Movement ALONG the supply curve
2. SHIFTS in the supply curve

A movement ALONG the supply curve

A movement along the supply curve is caused by a change in PRICE of the good or service. For instance, an increase in the price of the good results in an EXTENSION of supply (refers to how supply changes with a rise in the price of a commodity, given that no other factor affecting supply changes).

Whilst a decrease in price causes a CONTRACTION of supply (refers to how supply changes with a fall in the price of a commodity, without a change in any other factor that may affect supply).

A SHIFT in the supply curve

A shift in the supply curve is caused by a change in any non-price determinant of supply. The curve can shift to the right or left.
A rightward shift represents an increase in the quantity supplied at all prices(An increase in supply means that producers are now more willing and able to supply than they were before )S1 to S2.
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Zdroje: Dan Moynihan, Brian Titley: Economics – a complete course, Oxford university press.
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