09 - Supply 1
EC 202・16 minutes read
Supply in economics is influenced by price changes, seen through the law of supply that shows an increase in quantity supplied as prices rise. Factors like technology, resource costs, and number of sellers impact supply, with examples ranging from oil production investments to lead paint discontinuation.
Insights
- The law of supply states that as the price of a good increases, the quantity supplied by producers will also increase, as seen in examples like the rise in worldwide oil consumption over time due to price influences.
- Various factors such as federal excise taxes, subsidies, resource costs, technology, and the number of sellers significantly impact the supply of goods, with examples ranging from cigarette taxes affecting supply to technological advancements altering fabric production processes.
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Recent questions
What is the law of supply?
The law of supply states that as the price of a good rises, the quantity supplied will increase.
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Summary
00:00
Supply in Economics: Price Impact and Determinants
- Introduction to the concept of supply in economics, using the example of a small company producing surgical masks for a hospital.
- Explanation of the law of supply, stating that as the price of a good rises, the quantity supplied will increase.
- Example of worldwide oil consumption increase over 26 years, highlighting the impact of price on supply.
- Illustration of the Perdido oil rig in the Gulf of Mexico as an example of large investments in oil production influenced by price.
- Explanation of a supply schedule, showing how quantity supplied changes with price variations.
- Introduction of a supply curve to better understand the relationship between price and quantity supplied.
- Discussion on changes in supply, including movements along the supply curve and shifts due to factors like environmental regulations.
- Differentiation between a decrease in quantity supplied and a decrease in supply, with examples like regulations affecting supply.
- Explanation of federal excise taxes and subsidies as factors influencing supply, with examples like cigarette taxes and energy subsidies.
- Overview of determinants of supply, including resource costs, technology, price expectations, and the number of sellers, with examples like historical cost of computer memory and the impact of technology on fabric production.
16:47
"Factors Influencing Supply and Technology Reduction"
- Reduction in technology occurs when a product is no longer produced due to environmental damage or safety concerns, such as the case with lead paint which was once popular but later discovered to be dangerous, leading to its discontinuation.
- Price expectations play a crucial role in determining supply, as sellers may adjust their production based on anticipated future changes, like increasing output before a price drop or rising costs.
- The number of sellers impacts total supply, with new suppliers expanding the market supply, as seen in the proliferation of electric scooter companies leading to an abundance of scooters in cities due to their relative ease of production and availability.
