Law of supply and the supply curve. Non-price factors influencing to changes in supply. Factors affecting supply.

Supply (S): A relationship between price and the quantity sellers are willing and able to sell.

Quantity supplied (QS): The amount of an item that would be supplied at a certain price given all of the other influences on supply.

The supply of commodity QS depends not only on the commodity's price P, but on many other factors (Non-price determinants):

- the technology used (T): the rise of technology level shifts supply curve outward, because producer can propose higher quantity of commodity produced under the same price but lower costs;

- the inputs' prices (Pi): the rise of an input price shifts the supply curve inward, because producer can propose lower quantity of commodity produced under the same price but higher costs);

- expectations of future changes in price (E),

The Law of Supply says that as the price P goes up, the quantity supplied QS also goes up, ceteris paribus (i.e. if the other factors considered above are constant).

Supply curve: A graph of the relationship between price and quantity supplied (Fig.2.5). The positive (upward) slope of the supply curve reflects the law of supply.

Let's consider a following scale of the offer (tab. 2.2)

Moving along the supply curve S is called change in quantity supplied (Fig.2.6). Change in quantity supply: A change in the amount of an item offered for sale in response to a change in its price, other things being equal. In this situation a change in price p is accompanied in general by a change in quantity q.

A shift of supply curve (it may be not a parallel shift) is called a change of supply (Fig.2.7). Change in supply: A change in the relationship between the price of a good and the quantity supplied that results from a change in something other than the price of the good (non-price determinants changes).