on 16-Nov-2016 (Wed)

The Supply Function and the Supply Curve

• Resources and technology determine what it is possible to produce.
• Supply reflects what is best to produce (amongst what is technologically possible).

The supply function represents sellers' behavior.

Prices influence producers' supply decisions.

Positively sloped supply curve (upward).

• Higher price, higher incentive to supply the good. (if ceteris paribus)
• Higher prices higher profit.​
• As the price of a good falls, its supply falls as well.

There is a direct relationship between the price of a good and the amount of that good that will be supplied.

The supply curve, tells the analyst the quantity that producers are willing to supply for each price when all other influences on producers' planned sales remain the same.

Example 4

The graph below displays the quantity associated with price in a supply table.

0 is the quantity that will be associated with a price of $1 on a supply table.

The law of supply results from the general tendency for the marginal cost of producing a good or service to increase as the quantity produced increases.

A supply curve is also a minimum-supply-price curve. The greater the quantity produced, the higher the price a firm must be offered to be willing to produce that quantity.

The quantity supplied of a good or service is the amount that producers plan to sell during a given time period at a particular price.

Price is just one of the factors that affect producers' supply decisions. The supply curve isolates the impact of price on the quantity of a product supplied and assumes that all other factors stay the same.

• A change in quantity supplied is caused by a price change ONLY. It is a movement along the same supply curve.
• When one of the other factors that influence selling plans changes, there is a change in supply and a shift of the supply curve.

Example 6

A tax will shift the supply curve up by the amount of the tax.

At every price level, less is supplied. For example, at price P₀, originally Q₀ is supplied. After the tax, Q₁ is supplied at price P₀.

Innovation

the process of putting ideas into useful form and bringing them to market — is the true engine of economic growth.

The abundance of wealth creates a dangerous luxury. It allows a growing percentage of financiers tooperate at a level of abstraction where they lose sight of the details of how wealth is really produced.

Technology, Market, and Implementation. These three elements can be seen as the basic“factors of innovation” in much the same way that Land, Labor and Capital were once seen as the factors of production.

Technology includes the items on the left­handside. It encompasses those aspects of the innovative idea that are objectively verifiable,by scientific method: all repeatable constructions, formulations, etc. That will eventually make it possible to have an “idea embodied in the marketplace”.

Market includes the items on the right­hand side. It encompasses the people who will use the innovation, the benefits they can expect from it, the behaviors they will change as they benefit from using the innovation —and the profit they are willing to render to the businesses selling the innovation. Here we are in the realm of so­called human factors, measurable to a degree, but not nearly so predictable or objectively verifiable

Implementation includes all that must happen to connect the two, moving the Technology of the innovative idea to the human realm of the Market. It encompasses everything required to make the innovation functional in reality, from the forms and methods of production to the forms and methods of delivery..