Supply (November 14th, 2011)

Supply Schedule depends on

1. Marginnal Cost
2. Total Cost
3. Total Revenues
4. Producer Surplus (Profits)

^ Each point is what you value at the margin for each burrito.

Marginal Cost vs. Average Cost

Supply vs. Quantity Supplied (Drawn Graphs)

Why is it curved up? It cost more to make more, which is the Law of Supply. The law of supply is not true since it has diminishing return production and spending resources.
Markets increase, capital prices increases to produce burritos.
Supply is a relationship, not a number. Particular part on the curve and it has a marginal oppurtunity cost.
Total cost is Marginal Cost 1 + Marginal Cost 2, which equals the total cost.
The total revenue is price times quantity.
Producer surplus is total revenue minus total cost, which makes profit!
Diminishing returns production
Second one counts more than the first one.

Impacts on the supply shift.
Any change in factor prices. (rent falls and it is cheaper to produce.)
Expectations matters more for the producers than consumers.
Any improvement in technology will increase the prices for producers but decrease them for consumers. If everyone is selling Pizza, instead of selling burritos. Sell pizza since it's compositional. The supply curve shifts.
n is equal to percent change in quantity supplied over the percent change of price on the good.

Market demand and market supply
Flatter or elastic
Easier to aggro supply curve. Sellers they always ask the average cost versus marginal cost to calculator price for burritos.
Prices are how we ration goods in the economy.