AP 8

1. Supply slide 1
MODEL OF SUPPLY
an attempt to explain the amount supplied of
any good or service
SUPPLY DEFINED
Supply is a producer phenomenon

2. Supply slide 2
Law of Supply
PQs
Price Quantity Supply
P Qs

3. Supply slide 3
THE “STANDARD” MODEL OF
SUPPLY
• The DEPENDENT variable is the amount
supplied.
• The INDEPENDENT variables are:
• the good’s own price
• the prices of inputs used in its production
• the technology of production
• taxes and subsidies

4. Supply slide 4
As P ↓ - Qs ↓
P Qs
₱5 10
₱4 8
₱3 4
₱2 2
₱1 0
₱ 5
₱ 4
₱ 3
₱ 2
₱ 1
2 4 108
P
Qs
determinants
- Δ In price input
- Δ In Technology
- # of supplies
decrease in supply
increase in supply

5. Supply slide 5
Supply Equation
Qs = c + dP
Qs = quantity supply
c = intercept quantity supplied when price is zero
P = market price
d = slope change in quantity supplied for very change in price

6. Supply slide 6
Qs = c + dP
Qs =
c =
P =
d =
givens: ₱ 35 , ₱ 5
?
25
5
35 to 5
Divisible by the lowest price
d=
𝐶
𝑙𝑜𝑤𝑒𝑠𝑡 𝑝𝑟𝑖𝑐𝑒
Qs = c + dP
-25 + 5(35) =
-25 + 5(30) =
-25 + 5(25) =
-25 + 5(20) =
-25 + 5(15) =
-25 + 5(10) =
-25 + 5(5) =
125
150
100
75
50
25
0
P Qs
35 150
30 125
25 100
20 75
15 50
10 25
5 0
P
Qs
5
10
15
20
30
25
35
150125100755025

7. Supply slide 7
Solve the following Supply Equation
Qs = c + dP
1. givens: ₱ 50 , ₱ 10
2. givens: ₱ 75 , ₱ 20
3. givens: ₱ 100 , ₱ 25