2.2 Supply
To determine the market price and quantity sold of a product, knowing how much consumers want is not enough. We also need to know how much firms want to supply at any given price.
The quantity supplied is the amount of a good that firms want to sell during a given period at a given price, holding constant other factors that influence firms’ supply decisions, such as costs and government actions. Firms determine how much of a good to supply based on its price and other factors, including the costs of production and government rules and regulations. Usually, we expect firms to supply more at a higher price. Before concentrating on the role price plays in determining supply, we’ll briefly consider the role of some other factors.
Production ...
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