StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Define supply and explain what causes change (shifts) of supply and how supply can determine prices. Explain what is price elast - Essay Example

Comments (0) Cite this document
Summary
Supply and Price Relation Economic Concepts Author: Introduction Supply is the quantity of a product that a manufacturer is able and willing to sell at a specific price by keeping all supply factors constant that include price of related goods, expectations, price of input and number of suppliers etc…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.9% of users find it useful
Define supply and explain what causes change (shifts) of supply and how supply can determine prices. Explain what is price elast
Read Text Preview

Extract of sample "Define supply and explain what causes change (shifts) of supply and how supply can determine prices. Explain what is price elast"

Download file to see previous pages The curve signifies a law of supply implying the more the price is, the more a quantity is supplied. So if price is altered, the quantity supplied will be affected accordingly. There are a few assumptions associated with the law of supply as well. These include if there is no change in price for the factors of production or technique and related goods, the goal of the firm remains constant and manufacturers do not anticipate a change in the near future regarding price of the commodity. The relationship between price and related goods can go inverse if related goods price goes high e.g. a bar b q meal price will go high if the meat prices go high as the meal is dependent on meat but at the same time production will be decreased as the cost of production will increase. Technological advancement also helps increase production. The swifter a process is, the more the products will be manufactured. Fewer resources are required and consequently more can be produced. The number of suppliers entering the market impacts the prices by bringing it down due to competition (TR Jain, VK Ohri). Figure 1 Supply Shifts and Price Change or shift in supply refers to the phenomenon when this supply curve shifts either up towards the left or down towards the right. What causes such a change is the change in factors other than price resulting in an impact on the quantity being supplied. These factors are of the same commodity such as change in input price, number of suppliers or technology etc. this phenomenon is termed as change in the level of supply. Decrease in supply refers to the fact when supply drops due to change in the above mentioned factors. Similarly increase in supply refers to the fact when supply increases to change in those same factors. The companies are willing to produce more products in the same price when there is an increase in supply. Cheap available inputs or low cost production due to advancement in technology may contribute to these factors. Decrease in supply may be due to several reasons. One may be high cost of production because the technique is obsolete or factor prices increase. If there is a competition in market, the price of competing goods will also impact. A decrease in those prices may lead to a decrease in the product price. Similarly is number of companies in the markets decrease, this will also bring down the supply. Also, if a firm anticipates a rise in commodity price in the upcoming future, supply will be decreased. One other major factor may be due to a shift in the firm’s objectives. They might be willing to maximize their profits rather than sales (Jain and Ohri, 2010). The relationship between price and supply is held by the supply curve and stated by the law of supply. Selling chocolates will be profitable if the price of chocolates is high. Consequently chocolates will be delivered in huge quantities to meet the demand. Chocolate manufacturers will add additional resources and work on technological advancements and supplying techniques to meet the demand. Similarly if chocolate demand decreases, the production will decrease to a level to only fulfill the demand. Therefore changes in supply and demand impact market equilibrium (Mankiw, 2003). Price Elasticity and its Determinants Price elasticity of supply is a ratio between the percentage changes in the quantity supplied to the percentage change in the price. A particular supply curve of a product as a medicine or games depicts the elasticity ...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Define supply and explain what causes change (shifts) of supply and Essay”, n.d.)
Define supply and explain what causes change (shifts) of supply and Essay. Retrieved from https://studentshare.org/macro-microeconomics/1469158-define-supply-and-explain-what-causes-change
(Define Supply and Explain What Causes Change (shifts) of Supply and Essay)
Define Supply and Explain What Causes Change (shifts) of Supply and Essay. https://studentshare.org/macro-microeconomics/1469158-define-supply-and-explain-what-causes-change.
“Define Supply and Explain What Causes Change (shifts) of Supply and Essay”, n.d. https://studentshare.org/macro-microeconomics/1469158-define-supply-and-explain-what-causes-change.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Define supply and explain what causes change (shifts) of supply and how supply can determine prices. Explain what is price elast

American Airlines: Supply Chain Nightmare

For this reason, it is necessary that all business sectors are carefully reviewed – as often as possible – for the appropriateness of their structure and their daily needs; managers may fail to evaluate with accuracy their firm’s needs, a fact that can cause the failure of plans applied on the relevant organization (Hardless, 2005). On the other hand, the needs of various organizational departments are different; the methods used for the improvement of a firm’s activities should be flexible taking into consideration the characteristics of the specific organizational sector, its strengths/ weaknesses but also its role in the development of the firm’s activities. Boeing is a firm with a long presence in...
15 Pages (3750 words) Case Study

The Managing Change and Innovation

In line with the proposition as to whether these operational managers discern ways of enacting responses from the relevant quarters when it comes to products, services, and their related operations, we see that their role is immense and they have to bring about activities right from scratch.
The change factor has to be studied in the light of a consistent basis since as the maxim goes change is the only constant, thus we have to understand the basis of change from that very point of view nonetheless. Managers have to see that the new products and/or services mark the very basis for an organization and it is because of these products/services that the company is moving in a swift manner in a forward direction. Thus all their e...
6 Pages (1500 words) Assignment

How to Choose the Right Job

In a research that was conducted by the London School of Economics in 2005 – 2006, it has been seen that almost 61.6% of the students worked after graduation (LSE, 2008). According to Little (2007), the link between high education and employment is very high.

“Employability is a set of achievements – skills, understandings, and personal attributes – that make graduates more likely to gain employment and be successful in their chosen occupations, which benefits themselves, the workforce, the community, and the economy” (Little, 2007)

The research highlighted the strong points that are developed by students and the percentage of skills that are developed post-high education program...
6 Pages (1500 words) Research Paper

How Tomatoes Can Help Your Heart

Whether tomato is a fruit or vegetable? Well, this question can be answered in both ways. Botanically, tomato is a fruit but it is so frequently used as a culinary item all over the world, it is also considered as a vegetable. Long time back, the tomato was considered as fruit and helped the exporters to avoid taxation but 1893 the Supreme Court put an over this dispute by declaring that tomato was a vegetable and since that time onwards, tomatoes were taxed accordingly. Keeping in harmony with this tradition, till date tomatoes are served as entrée and very rarely as dessert. Apart from side dishes, wide array of main course dishes are also prepared from tomatoes and these dishes are regarded considered as lip-smacking cui...
6 Pages (1500 words) Case Study

Oil Prices by OPEC and Market Fundamentals

Market failure is defined as the inefficient allocation of resources by the market, the free market is considered to optimally prices and resources in the production of goods and services, and this is because the price and quantity produced are determined by market forces which include the demand and the supply. The control of prices by a firm or an organization in the market results in market failure, therefore OPEC leads to market failure due to its nature in the market.

OPEC was formed in 1960 by 5 oil-producing countries which include Venezuela, Saudi Arabia, Kuwait, Iran and Iraq, The aim of this organization was to unify petroleum-producing countries in order to realize fair and stable prices of oil .other oil-pro...
6 Pages (1500 words) Report

Causes of Illegal Drugs Consumption Among Women

The study investigates divergent sociological views by making a comparison of these researches and concludes that sensational pleasures, domestic turmoil and biological characteristics play a dominant role in women’s involvement in illegal drug addiction.
Illegal drugs refer to the drugs consumption and trading of which is strictly prohibited according to the prevailing statutes of law. Excessive trade and trafficking of illegal drugs have accelerated their application among adults, minors and women, which have, consequently, brought critical health problems for the consumers in their wake. There was a time when drug addiction was considered to be a masculine activity only, and women had no concern with drug usage. With...
7 Pages (1750 words) Coursework

Relationship between Money Supply and Inflation in Saudi Arabia

Over the recent past, the effects of money supply, debt and inflation have become contentious issues for debate. Furthermore, frequent cautions concerning the risk of very large budgetary deficits aver that this would send up the upcoming state debt and capital rate as indicated by the rates (interests). As a nation, Saudi Arabia has a bi and enduring budgetary deficit over the past two decades and the government has been forced to go into the market so as to have loan access and to make up for the deficits. Given the impact of this on inflation and other economic variables, it's imperative and of great alarm for strategy architects (strategists) to understand how microeconomics has an effect on money supply, financial plan defici...
10 Pages (2500 words) Speech or Presentation

In What Ways Did 20th Century Conflicts Change the Nature of Western Introspection

The 20th century period was marked by several conflicts: World War I, the Holocaust, World War II, the exploitation of Latin American countries, Racial Segregation and the Negro Revolution which spawned the Civil Rights Movement in America and the Feminist Movement.

The Holocaust is admittedly one of the most horrific events in the history of mankind and the impact of the horrors it brought changed the way Ellie Wiesel sees his faith. While Jews are known for their orthodox and unquestioning faith in God, Wiesel’s experiences in the concentration camps of Auschwitz compelled her to question God’s existence. In Night, Wiesel tells of the unspeakable hanging of a young boy who was left dangling for thirty min...
8 Pages (2000 words) Assignment

Organizational Change is an Opportunity for Organizational Learning

Before we move on to how it is beneficial for everyone, even though it is perceived negatively by a large number of people and is one of their biggest fears, we need to discuss the different kinds of changes and the reason behind them.

An organization can go through a structural change. This can be due to a takeover or a complete change of management. In this type of change, the way of working and many dimensions of business activity is altered. This move is usually towards modernization and staying up with the pace but is too fast and sudden, and thus hard for the stakeholders to adjust with. Then there is a change brought about by the change in the services or goods produced and provided. This is usually a positive ch...
6 Pages (1500 words) Article

Analysis of Articles about Climate Change

...Climate change Can we imagine an Earth where there are no green mountains, no deep blue seas and no living creatures? No. But a disaster of such magnitude and dimension is looming over Earth. Humans have identified this threat, defined it and given it a name, global warming. This dangerous proposition is based on the truth that even a 5 % increase in the surface temperature on Earth can wipe out life from this beautiful planet. And the temperature is increasing as never before. It was in 1990s that the world began to hear serious warnings on global warming and climate change. The summary for policy makers prepared as part of the first assessment report by Inter-governmental Panel on Climate Change was the first ever in depth study...
6 Pages (1500 words) Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Define supply and explain what causes change (shifts) of supply and how supply can determine prices. Explain what is price elast for FREE!

Contact Us