GUIDE TO READING
For almost any good or service, the higher the price, the larger the quantity that will be offered for sale.
Key Terms supply, law of supply, supply schedule, supply curve, profit, market supply
Reading Strategy Organizing Information Draw the diagrams shown below. As you read this section, complete the diagrams by adding arrows to Indicate Increase or decrease to the Quantity Supplied bar.
When PriOfrH Rise
When Prices Tall
Read to Learn
* What does the law of supply state?
♦ What Is the difference between a supply sched-ule and a supply curve?
An Introduction to Supply
In the previous chapter, you read about one of the major forces that contributes to setting prices in our economy. That force was consumers' demand for goods and services. There is another major force at work, called supply. As you can sec from the Americans in Action feature above, a low supply of beef led to high prices in early 2001.
What is supply? Supply refers to the various quantities of a good or service that producers are willing to sell at all possible market prices. Supply normally refers to the output of a single business or producer. However, as in the case of demand, it is also possible to add the supply of all producers together to get che supply for the entire market.
Supply is the opposite of demand. Buyers demand different quantities of a good depending on the price chat sellers ask. Suppliers offer different quantities of a product depending on the price that buyers are willing to pay.
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