supply curve - relationship between how much producers willing to sell and price
- price (x) vs quantity (y) graph, axes can be reversed
- what price necessary to get designated quantity? what quantity necessary to get designated price?
- higher price >> firm able/willing to produce more >> slopes upward
- variables affecting supply curves - labor, capital, raw materials
- lower cost of production >> higher profits >> expand output
- supply curve shifts as variables change
- shift not caused by change in price (already part of calculated curve)
- price only changes mov’t up and down the existing curve
demand curve - relationship between how much consumers willing to buy and price
- price decreases >> consumers more willing to buy >> slopes downward
- variables affecting demand curves - income, consumer tastes, price of related/similar goods
- more income >> more willing to buy
- substitutes (knock-offs) - increasing price of one >> increasing consumption of other
- complements - used together >> increasing price of one >> decreasing consumption of other
- demand curve shifts as w/ supply curve
- income increases >> more quantity bought overall (regardless of price)
- competition lowers prices >> cheaper substitutes >> shifts inward >> less bought
- demand curve
- supply curve
- equilibrium point
- all changes made to move towards equilibrium point
- move towards equilibrium point >> move along curve
- changes in demand curve
- increased income
- substitutes got more expensive
- complements come free or at reduced price
- decreased income
- substitutes got cheaper
- complements got more expensive
- changes in supply curve
- cost of production (labor/materials/tariffs) increase
- cost of production decrea
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