Class Lecture #31 - 11/14

This class introduced the theory of supply....

"Law" of supply = when the price goes up, the quantity supplied goes up (i.e it costs more to make more)
  - quantity supplied = how much you want to produce at any particular price
           SUPPLY SCHEDULE

Price/M.O.C. (marginal opportunity cost)	Quantity Supplied
$0	0
$0.50	0
$1.00	1
$1.50	2
$2.00	3
$2.50	4
$3.00	5

   - price goes up --> willing to make more
         What changes supply?
1.) own price (Qs) = move along the supply curve
2.) something else = supply curve shifts
         - What shifts supply curve?...
              * change in factor prices
              * technology changes
              * substitutes
              * expectations


Supply elasticities
 n = (% change in Qs)/(% change in price)
    > 1    elastic
    < 1    inelastic

What you can read off curve:
(1) marginal opp. cost
(2) total costs
(3) total revenues
(4) producer surplus