The Shape and Position of Supply Curves

       In competitive markets the shape, or elasticity of supply, reflects time in the production process, such as the immediate or market period, the short run, and the long run. Elasticity of supply is the relative change in price that induces a relative change in quantity supplied. The supply curve is a line on a diagram where the vertical axis measures price and the horizontal axis is quantity. Usually the coefficient of elasticity is positive, meaning that a rise in price induces an increase in the quantity supplied. In the immediate or market period, a given moment, time is defined as too short to allow for a change in output. The supply curve is vertical, and the coefficient of elasticity is zero.

       The short run is defined as a period sufficiently long to permit the producer to increase variable inputs, usually labor and materials, but not long enough to permit changes in plant and equipment. The supply curve in the short run is less inelastic or more elastic than in the immediate period. The long run permits sufficient time for the-producer to increase plant and equipment. The longer the time, the greater the elasticity of supply.

       Changes in supply are shifts in the position of supply curves. An increase in supply is a rightward movement of a supply curve, with more of the commodity being offered for sale at each possible price. Conversely, a decrease in supply shifts the supply to the left. An increase in supply can occur because sellers expect lower prices in the future, or, as in the agricultural sector, because of bountiful crops. The reverse is true of a decrease in supply. Over periods of time long enough for production processes to change, improvements in technology and changes in input prices and productivities are the main causes of changes in supply.

 

VOCABULARY

 

aggregate supply — совокупное предложение       

complex — сложный, комплексный

forthcoming — предстоящий, ожидаемый

opportunity costs - альтернативные издержки

accountant - бухгалтер

explicit — явный, откровенный

implicit - подразумевающийся

to calculate - подсчитывать, вычислять, рассчитывать

for(e)go - предшествовать(по времени или в пространстве)

to convert - обращать, преобразовывать

shape — форма

given moment - данный момент

sufficiently - достаточно, в достаточной мере

to permit - позволять, разрешать
variable - переменный, изменчивый

a variable - переменная

rightward movement — движение вправо

conversely — наоборот

bountiful crops - обильный урожай

 

General understanding:

 

1. What is the difference of the concept of supply in
macro— and microeconomics?

2. What are opportunity costs?

3. What are implicit costs?

4. What, according to the text, a sole proprietor or the
owners should do?

5. What does the elasticity of supply show?

6. What is the difference between the short-time and
long-time supply?

7. Why do changes in the supply affect the position of
the supply curve?

 

1.    Which of the following is not true:

A. Supply is a concept of macroeconomics.

B. Economists differ from bookkeepers and tax-gatherers because they include also opportunity costs.

C. The shape of the supply curve provides specialist with the information on elasticity of supply and the reflection of the shareholder.

D. The supply curve is a line on a diagram where the vertical axis measures price and the horizontal axis is quantity.

E. Bountiful crops is a cause of increase in supply,

F. Improvements in technology and changes in input prices and productivities are the main causes of the changes in elastic demand.

 

2.    Find equivalents in Russian:

a) fundamental concept

b) current prices

c) business costs for wages,

d) sole proprietor

e) alternative investment projects.

f) coefficient of elasticity

g) a decrease in supply

h) improvements in technology

3. Find antonyms for the following words. Write
one sentence with each:

 

a) expected —

b) complex —

c) possible —

d) future —

e) competitive —

 

4.    Find the synonyms of the following:

a) accountant —

b) calculate -

c) permit —

d) expect —

e) complex —

f) opportunity —

g) businessman –

5. Define the following terms in English:

 

a) aggregate supply

b) opportunity costs

c) sole proprietor

d) elasticity of supply

e) coefficient of elasticity

Questions for discussion:

 

1. How do you understand: «Economists differ from
accountants and from the Internal Revenue Service»?

2. In what sphere can a person with the economic
education work?

3. What is a better-paid job for economist: applied
economics or theoretical research? Give examples to
support your opinion.

 

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