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Chapter 7





                            Supply





               4.1 Supply

               Supply is the amount that producers are willing and able to produce at a given price.


               4.2  Factors affecting supply for a good


                    Price                                 As P, supply  due to cost considerations

                    Prices of other goods                 Better to make them instead?

                    Cost changes                          e.g. new technology, greater efficiency, VAT

                    Success of harvests                   Especially agricultural goods


               4.3  Changes in the factors affecting supply


               Changes in price                               Changes in the conditions of supply

               Leads to movements along the curve             Leads to movements of the curve

                 P                                              P
                      P – Expansion                                                S 2
                                            S
                                                                                            S 1



                              P – Contraction                                  Shift in supply



                                                      Q                                            Q




















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