Professional Documents
Culture Documents
6
5 states that there is a
4
positive relationship
3
2
between price and
1 quantity of a good
0 supplied.
0 10 20 30 40 50
Thousands of bushels of soybeans This means that
produced per year
supply curves
typically have a
positive slope.
Supply Schedule
A supply schedule Supply Schedule for Coffee Beans
1.25
1.00
0.75
0.50
0 7 9 11 13 15 17
Quantity of coffee beans (billions of pounds)
What Causes a Supply Curve to Shift?
Changes in input prices
An input is a good that is used to produce another
good.
Changes in the prices of related goods and
services
Changes in technology
Changes in expectations
Changes in the number of producers
Weather
An Increase in Supply
The entry of Vietnam Supply Schedule for Coffee Beans
into the coffee bean
business generated an Price of Quantity of beans supplied
increase in supplya coffee beans (billions of pounds)
rise in the quantity (per pound) Before entry After entry
supplied at any given $2.00 11.6 13.9
price.
1.75 11.5 13.8
This event is
represented by the two 1.50 11.2 13.4
supply schedulesone 1.25 10.7 12.8
showing supply before 1.00 10.0 12.0
Vietnams entry, the 0.75 9.1 10.9
other showing supply
0.50 8.0 9.6
after Vietnam came in.
An Increase in Supply
Price of coffee
beans (per
pound)
S S
1 2
$2.00
A movement
1.75 along the supply
curve
1.50
1.25
1.00
0 7 9 11 13 15 17
Change in supply
(Shift of curve).
Supply, Demand and Equilibrium
Equilibrium in a competitive market: when the
quantity demanded of a good equals the quantity
supplied of that good.
Only in equilibrium
is quantity supplied
equal to quantity
demanded.
At any price level
other than P0, the
wishes of buyers
and sellers do not
coincide.
Price of coffee
Surplus
beans (per pound)
There is a surplus of a
Supply good when the quantity
$2.00
supplied exceeds the
1.75
Surplus quantity demanded.
1.50 Surpluses occur when
1.25 the price is above its
E
equilibrium level.
1.00
0.75
0.50 Demand
0 7 8.1 10 11.2 13 15 17
Quantity of coffee beans
(billions of pounds)
Quantity Quantity
demanded supplied
Price of
Shortage
coffee beans There is a shortage of a
(per pound)
good when the quantity
Supply
$2.00 demanded exceeds the
1.75 quantity supplied.
1.50
Shortages occur when
the price is below its
1.25
equilibrium level.
1.00 E
0.75
Shortage
0.50 Demand
0 7 9.1 10 11.5 13 15 17
Quantity of coffee beans
(billions of pounds)
Quantity Quantity
supplied demanded
Market Equilibrium
Price of
coffee beans Market equilibrium
(per pound)
Supply
occurs at point E,
$2.00
where the supply
1.75 curve and the demand
1.50 curve intersect.
1.25
0.50 Demand
0 7 10 13 15 17