Supply
| English | Chinese | Pinyin |
|---|---|---|
| supply | 供给 | gōng jǐ |
| law of supply | 供给定律 | gōng jǐ dìng lǜ |
| quantity supplied | 供给量 | gōng jǐ liàng |
| costs | 成本 | chéng běn |
| subsidies | 补贴 | bǔ tiē |
The sellers' side of every market
- Buyers are only half of a market — someone has to make the goods.
- Sellers, like buyers, respond to price, but in the opposite direction.
- A higher price is an invitation to produce more.
- That is the idea of supply 供给.
The law of supply
- Supply is the quantity producers are willing and able to sell at each price.
- The law of supply 供给定律: a higher price leads to a higher quantity supplied 供给量 — so the curve slopes up.
- A higher price makes producing more profitable, drawing out extra output.
Supply and demand
The supply curve slopes up — a higher price draws out more. Cheaper inputs or better technology shift the whole curve right.
The law of supply says a higher price leads to a:
A higher price makes producing more profitable, so quantity supplied rises.
Movement vs shift
- A change in the good's own price moves you along the curve — a change in quantity supplied.
- A change in a determinant shifts the whole curve.
Same trap as demand. Only the good's own price moves you along the supply curve. Costs, technology, and taxes shift it — draw the diagram carefully.
A fall in input costs causes a movement along the supply curve.
Input costs are not the good's own price — cheaper inputs shift the whole curve right.
What shifts supply
- Input costs 成本 — cheaper inputs shift supply right, dearer inputs left.
- Technology — better technology lowers cost, shifting supply right.
- The number of sellers, taxes, subsidies 补贴, and producer expectations all shift it too.
- A new tax on sellers shifts supply left; a subsidy shifts it right.
Better production technology shifts the supply curve:
Better technology lowers cost, so firms supply more at every price.
A government payment per unit to sellers is a ______, which shifts supply right.
A subsidy lowers sellers' costs, shifting supply to the right.
A new per-unit tax on sellers shifts the supply curve:
A tax raises sellers' costs, so they supply less at every price — a leftward shift.
Select all that shift the supply curve to the right.
Cheaper inputs, technology and more sellers raise supply; a tax shifts it left.
Supply slopes up (the law of supply). The good's own price = a movement along; costs, technology, taxes, and subsidies = a shift. Cheaper inputs or better technology shift supply right; a new tax shifts it left.