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Chapter 3: Q. 3.4 (page 49)

Distinguish between changes in supply and changes in quantity supplied

Short Answer

Expert verified

Change in supply refers to change in the supply function, whereas change in quantity supplied simply refers to at what price, how much quantity is supplied by the producers.

Step by step solution

01

Step1. Introduction

Law of supply:

States that there exists a direct (positive) relationship between quantity supplied and price of the good, i.e., the two move in the same direction and not counter to the other.

02

Step2. Explanation

Change in supply refers to the shift of supply curve, that is the change in the supply function of a producer due to change in factors like cost of production, etc. Whenever either of the factors, or a combination change, they simultaneously affect the supply leading to a complete change in the function itself. This will cause a complete shift of the curve as the curve equation has changed in terms of the change in supply function.

Change in quantity supplied can rather be linked with the concept of movement along the supply curve, i.e., how the quantity that a particular producer produces and supplies to the market changes with the change in prices in the market. If price rises, suppliers would like to supply more as well, and vice versa. So, the change in supply in terms of number of units, corresponding to change in the price, while the supply function remains as it is, is called change in quantity supplied.

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Most popular questions from this chapter

In the market for portable power banks(a normal good), explain whether the following events would cause an increase or a decrease in demand or an increase or decrease in the quantity demanded. Also, explain what happens to the equilibrium quantity and the market-clearing price.

a. There is an increase in the price of carry cases for portable power banks.

b. There is a decrease in the price of devices used to charge portable power banks.

c. There is an increase in the number of consumers of portable power banks.

d. A booming economy increases the income of the typical buyer of portable power banks.

e. Consumers of portable power banks anticipate that the price of this good will decline in the future.

In Fig 3-9, the current position of the supply curve is S1, and the price of a portable power bank is $3. If the suppliers anticipate a higher price of portable power banks in the future, will the supply curve shift to S2 or to S3? What is the change in the amount of portable power banks supplied?

In Fig 3-4, the current position of the demand curve is D1, and the price of a portable power bank, which is a normal good, is $3. If there is an increase in consumer incomes, will the demand curve shift to D2 or to D3? What is the change in the amount of portable power banks demanded?

Consider the following diagram of a market for one-bedroom rental apartments in a college community.

a. At a rental rate of \(1,000 per month, is there an excess quantity supplied, or is there an excess quantity demanded? What is the amount of the excess quantity supplied or demanded?

b.If the present rental rate of one-bedroom apartments is\)1,000 per month, through what mechanism will the rental rate adjust to the equilibrium rental rate of\(800?

c.At a rental rate of\)600 per month, is there an excess quantity supplied, or is there an excess quantity demanded? What is the amount of the excess quantity supplied or demanded?

d.If the present rental rate of one-bedroom apartments is \(600 per month, through what mechanism will the rental rate adjust to the equilibrium rental rate of\)800?

Consider the market for cable-based Internet access

service,which isanormal good.Explain whether

the following events would cause an increase ora

decrease in demand or an increase oradecrease in

the quantity demanded.

a.Firms providing wireless(an alternative to cable)

Internet access services reduce their prices.

b.Firms providing cable-based Internet access

services reduce their prices.

e.There isadecrease in the incomes earned by con

sumers of cable-based Internet access services.

d.Consumers'tastes shift away from using wire

less Internet access in favor of cable-based

Internet access services.
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