supply and price elasticity of supply

SUPPLY AND PRICE ELASTICITY OF SUPPLY.

SUPPLY

The quantity of goods that supplier are willing to sell at any given price over a period of time.A supply curve will show the quantity that will be supplied over a period of time at any given price.

The supply curve is upward sloping, showing that firms increase production of a good as its price increases. An upward sloping curve assumes that:

• firms are motivated to produce profit.

• the cost of producing a unit increases as output increases.

CONDITIONS OF SUPPLY.

Change in price will lead to change in quantity supplied. The conditions of supply include costs of production, technology and the price of other goods.

COST OF PRODUCTION.

Cost of production increases at any given level of output, firms will attempt to pass on these increases in the form of higher profits. if they cannot charge a higher price then profits will fall and firms will produce less. 

  TECHNOLOGY

Is another factor that affects the technology, the supply curve is drawn on the assumption that the state of technology remains unchaged.

• goals of sellers- some reason there is a change in profit…