Chapter 5.1

Supply is the willingness and ability of sellers
to produce and offer to sell different
quantities of a good at different prices during
a specific time period
Holt’s Moving And Storage is in desperate need of workers this weekend.
How many hours would you be willing to work between 7 a.m. Saturday
and 5 p.m. Sunday? (35 hours is the max). We pay:
$7.25 an hour
$14.50 an hour
$29 an hour
Supply of labor in hours
Wages vs Number of Hours Worked
30
Price per hour
25
20
15
10
5
0
0
40
80
120
160
200
240
280
320
360
400
Quantity Supplied of Work Hours
440
480
520
560

The law of supply states that as the price of a
good increases, the quantity supplied of the
good increases, and as the price of a good
decreases, the quantity supplied of the good
decreases
Law of Supply:
If P then Qs
If P then Qs
Where P = price and Qs = quantity supplied
Law of Supply:
If P  then Qs 
If P  then Qs 
Law of Demand:
If P  then Qd 
If P  then Qd 


Remember: “supply” refers to the entire line!
Quantity supplied refers to the number of
units of a good produced and offered for sale
at a specific price
◦ “quantity supplied” refers to an amount on the line!


A firm’s supply curve is what it sounds like: it
is the supply curve for a particular business
(firm)
A market supply curve is the sum of all
business’ supply curves


The law of supply--as price rises, quantity
supplied rises--does not hold true for all
goods; nor does it hold true over all time
periods
Some goods are perfectly inelastic for
supply—no matter how high the price gets
P
they can’t make more
S
P rises
by 10%
P2
P1
Q1
Qs changes
by 0%
Q
Antonio Stradivai’s violins
Sold out events
P
Land on Earth
P rises
by 10%
S
P2
P1
Q1
Qs changes
by 0%
Q