this is to help you in economics class. book used: Holt Economics isbn: 0-03-066336-9

1. ECONOMICS CHAPTER 4
Nature of supply
4.1, 4.2, 4.3

2. WHAT IS THE DIFFERENCE BETWEEN
SUPPLY AND QUANTITY SUPPLIED?
Supply: the quantity of goods and services that producers are willing and able
to offer at VARIOUS prices.
Quantity supplied: the quantity of goods and services that producers are
willing and able to offer at a CERTAIN price.
The difference between both is the quantity supplied of the goods is at a
certain price while the supply is the quantity of the goods are available at
various prices.

3. WHAT DOES THE LAW OF SUPPLY
STATE?
The law of supply states a relationship in which the supply's price affects the
amount of supply the producers supply.
If they can price of the supplies higher, the amount of supplies goes up as
well.
If the producers can’t price as high, they won’t supply as many goods.

4. WHAT DO SUPPLY SCHEDULES AND
SUPPLY CURVES ILLUSTRATE?
Supply schedule: lists each quantity of a product that producers are willing to
supply at carious market prices.
Supply curve: plots the information from the supply schedule.
Together, they illustrate the price of a good and the quantity supplied.
Supply schedule:

5. WHAT IS SUPPLY ELASTICITY?
The degree that price changes effect the quantity supplied.
Elastic supply: small change in price makes a big change in supplied
Products with elastic supply are usually quickly and inexpensively made with
few available resources.
Inelastic supply: small change, makes almost, if any change in amount
supplied.
Products with inelastic supply usually require loads of time, money and
resources that aren’t easily available.
Just like demand elasticity.

6. WHAT DOES IT MEAN FOR A
PRODUCTS SUPPLY TO SHIFT?
It means there was a shift in the supply curve.
The determinants of supply can shift the entire supply curve.
If supply determinants cause a decrease in supply, the curve shifts to the left.
If the determinants of supply cause an increase in the supply of product, the
curve shifts right.

7. WHAT DETERMINANTS MIGHT CAUSE
A PRODUCT’S SUPPLY CURVE TO
SHIFT?
Prices of resources,
Government tools,
Technology,
Competition,
Prices of related goods,
and
Producer expectations

8. HOW DOES TAX DIFFER FROM A
SUBSIDY?
Tax: a required payment of money to the government to help fund
government services.
Subsidy: payments to private businesses by the government
The difference between tax and subsidy is that with subsidies, the
government pays businesses. With tax, we pay the government.

9. WHY DO PRODUCERS LOOK AT
PRODUCTIVITY WHEN MAKING
SUPPLY DECISIONS?
To maximize profit and efficiency.
They look at this by looking at their total product, marginal product, and how
the two figures change as input changes.
Total product: (total product) all the product a company makes within a
certain time frame.
Marginal product: change in output generated by adding one more unit of
input.

10. HOW DO VARYING LEVELS OF INPUT
AFFECT THE LEVELS OF OUTPUT?
Law of diminishing returns: if one input is added, productivity increases until
a certain point. If you add too much input, product will eventually decrease.
Like buying too many apples at a store. A few is okay, but if you have too
many, you can’t possibly eat them all and the left overs will eventually go
rotten.

11. HOW DO CHANGES IN PRODUCTION
COSTS AFFECT PRODUCERS’ SUPPLY
DECISIONS?
It affects the way they produce and possibly what they produce with.
After a change in production cost, producers have to analyze costs and sort
them into 4 categories:
Fixed – production costs that don’t change (rent, taxes, salaries)
Variable – change as the level of output changes
Total – the sum of fixed and variable production costs
Marginal – additional costs of producing an extra unit of output.

12. CREDITS
Book:
Pennington, Robert Leroy. Holt Economics. Austin, Texas: Holt, Rinehart and
Winston, 2003. Print.
Picture:
"Law of Supply." Law of Supply. Econtrader, 2012. Web. 24 Aug. 2012.
<http://www.econtrader.com/economics/law_of_supply/>.