2. First: The Law of Supply
The law of Supply states that: there is a direct
(a positive) relationship between the price of
any good and its quantity supplied, other
things equal
3. 2nd: Supply Schedule & Supply curve
Supply curve shows the positive
relationship between the price of any
good & its quantity supplied, other
things equal
4.
5. choice
1) According to the law of supply, there is a
A) negative relationship between price and the
quantity of a good supplied.
B) positive relationship between price and the
quantity of a good supplied.
C) negative relationship between price and the
change in supply.
D) positive relationship between price and the
change in supply.
6. -Movement along on supply curve
• A rise in product’s own price leads to a
movement along the supply curve causing a
rise in its Q.s.
• A fall in product’s own price leads to a
movement along the supply curve causing a
fall in its Q.S.
7. Shifts in Supply Curve
• Supply curve may shift rightward or downward (=
increase in supply) or shift leftward or inward
(=decrease in supply) due to many reasons:
1- cost of production:(- ve relation)
EX:- Input prices(resources prices such as: oil price,
energy price, materials, labor and machine).
-If input prices decreases supply of (x) increases (shifts right)
-If input prices increases supply of (x) decreases (shifts left)
8. choice.
1) Arightward shift to the supply curve for pizza could be caused by:-
A) A decrease in the price of corn.
B)A change in households 's preferences and income.
C) Reduction in pizza's prices.
D) An increase in the price of the cheese.
2) The price of hard drives used in the manufacturing of laptop
computers has risen. This will lead to ________ laptop
computers.
A) An increase in the supply of
B) A decrease in the supply of
C) An increase in the quantity supplied of
D) A decrease in the quantity supplied of
9. 2- Change in Level of technology or productivity
(+ve relation):
-If level of technology increase (technological
progress) ----->supply of X increase (shift right).
-if level of technology decrease ------>supply of
X decrease (shift leftward)
TRUE OR FALSE:-
- A technological advance in the production of
MP3 players will shift the supply of MP3
players right.
10. 3) Change in Price of related products (goods)
(-ve relation):
Example: a company produces mobiles & cameras
using the same machines;
*if the price of mobiles increase--->Q.S
mobiles increase --->supply of cameras
decrease (shift left).
*if the price of mobiles decrease ---> Q.S
mobiles decrease --->supply of cameras
increase (shift right)
11. TRUE OR FALSE
1-Land in the south can often be used to grow
either rice or cotton, if the price of rice
increases, this will not affect the supply for
cotton.
2- The increase in the price of flour will not
affect the supply of bread.
12. 4) Taxes (-ve relation):
• if Taxes increases supply of X decrease
(shift leftward)because more taxes increase
the cost& vice versa
5) subsidies (+ve relation):
• if subsidies increases supply of X
increases (shift rightward)because more
subsidies decrease the cost& vice versa
13. 6) Change in number of producers:
(+ve relation)
- If the number of producers increase supply of
X increases (shift rightward)
- If the number of producers decrease supply of
X decreases (shift leftward)
14.
15.
16. The market Supply Curve
-The market supply curve is the horizontal sum
of individual supply curves.
EX :If the market of a certain good consists of 2
producers then the market supply curve can
be derived as follows:
17.
18. Questions
Q1:- True or false:-
1- A rightward shift of suppiy curve for computers
could be caused by an increase in price of
computers.
2- the increase in cost of producing cars reduce the
demand for cars.
3-A decrease in wage rate of construction workers
increase the supply of house.
4- A movement along the supply curve ic caused
by change in prices of factors of production.
5- Introducing a new technology to produce CDs
shift the supply of CDs right.
19. Q2:-choice:-
1- Along a supply curve:-
A- supply changes as price change.
B- Quantity supplied changes as price changes.
C- supply changes as technology changes.
B- Quantity supplied changes as technology changes.
2- If in the market for apples, the supply curve has
shifted to the left,
A- The supply curve of apples has increased.
B- The supply curve of apples has decreased.
C- The quantity supplied curve has increased.
B- The quantity supplied curve has decreased.
20. 3- If price rises, what happens to supply for a product?
A- It increases.
B-It decreased.
C- It doesn’t change.
D- All of the above are incorrect.
4- If price rises, what happens to quantity supplied for a
product?
A- It increases.
B-It decreased.
C- It doesn’t change.
D- All of the above are incorrect.
21. Q3:- Show graphically:-
1- The effect of a fall in inputs prices on supply
curve.
2- The difference between change in supply
and change in quantity supplied.
