What happens to the supply curve for a product when the supply goes down quizlet?

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Firms view taxes as a cost of production, just as they do raw materials and labor. If a company pays taxes on inventory or pays fees for a license to produce, the cost of production goes up. This causes the supply curve to shift to the left. However, if taxes go down, then production costs go down as well. When this happens, supply normally increases and the supply curve shifts to the right.
subsidy- is a government payment to an individual, business, or other group to encourage or protect a certain type of economic activity. Subsidies lower the cost of production, encouraging current producers to remain in the market and new producers to enter. When subsidies are repealed, costs
go up, producers leave the market, and the supply curve shifts to the left. Historically, many farmers in the milk,cotton, corn, wheat, and soybean industries received subsidies to support their income. Some farmers would have quit farming without these subsidies. Instead, the subsidies kept them in business and even attracted additional farmers into the industry—thereby shifting the market supply curve to the right.

Government Regulations- When the government establishes new regulations, the cost of production can change, causing a change in supply.increased—or tighter—
government regulations restrict supply, causing the supply curve to shift to the left. Relaxed government regulations allow producers to lower the cost of production, which results in a shift of the supply curve to the right.

We typically apply ceteris paribus when we observe how changes in price affect demand or supply, but we can apply ceteris paribus more generally. In the real world, demand and supply depend on more factors than just price. For example, a consumer's demand depends on income and a producer's supply depends on the cost of producing the product. How can we analyze the effect on demand or supply if multiple factors are changing at the same time—say price rises and income falls? The answer is that we examine the changes one at a time, assuming the other factors are held constant.
For example, we can say that an increase in the price reduces the amount consumers will buy (assuming income, and anything else that affects demand, is unchanged). Additionally, a decrease in income reduces the amount consumers can afford to buy (assuming price, and anything else that affects demand, is unchanged). This is what the ceteris paribus assumption really means. In this particular case, after we analyze each factor separately, we can combine the results. The amount consumers buy falls for two reasons: first because of the higher price and second because of the lower income.

There are other economic variables that influence consumption, such as wealth, overall price level (for consumption goods), or job security (measured, for example, by the unemployment rate). These variables are considered, but when our major focus is price, we assume that wealth, price of other goods, and the unemployment rate do not change (at least in the short run). This means out of all variables that influence consumption, our analysis allows only price to change; everything else is assumed to be unchanged or constant. This allows us to focus our analysis on just one variable: price. This assumption is called the ceteris paribus condition.

But how are important factors such as wealth, price of related goods, and the unemployment rate captured in a consumption behavior equation? If these factors do not change, then their combined influence on consumption will not change either. We can show their combined influence with a constant number or a parameter.
Assuming that all factors other than price are equal (ceteris paribus) raises the question, what if one of these factors (wealth, price of related goods, or unemployment) does change? If that happens, then the cumulative influence of these factors will change from its previous value. This means that, depending on if the cumulative influence increases or decreases, we have to consider a bigger or smaller number.
The economic impacts that are of interest for the analysis are considered as variables on the right hand-side of the equation. All other economic impacts that influence the (dependent) variable on the left are considered to be constant in the short run (ceteris paribus condition). The cumulative impact of these factors are reflected in either a constant number or as a parameter that is added to the equation's right side.

If one of the economic impacts that were considered to be constant changes, then the cumulative influence of all economic impacts that were constant before changes, thus changing either the numeric constant or the parameter that is added to the equation. The equation as a whole changes and so does the curve that is based on the equation. Depending on if the cumulative impact increases or decreases, the curve will shift upward or downwards.

The Law of Supply tells us that an increase in the price of a good leads to an increase in its quantity supplied and vice versa. After all, a supply curve shows how quantity supplied will change as the price rises and falls, assuming ceteris paribus that no other economically relevant factors are changing. If other factors relevant to supply do change, then the entire supply curve will shift. Price is the determinant with the strongest influence on quantity supplied. If the price of a good is high, its quantity supplied will also be high, and vice versa. This seems intuitively correct because if firms are able to sell their product for a high price, they will likely plan to produce more of it. A firm produces goods and services using specific combinations of labor, materials, and machinery, or factors of production. If a firm faces lower costs of production, while the prices for the good or service the firm produces remain unchanged, a firm's profits go up. In other words, when a company produces a good, it needs what economists call inputs. In order to produce a product, firms need materials, energy, and labor. For example, the production process for cakes might require materials like dough, nuts, and baker's labor to produce the final product. All these inputs must be purchased by the firm, creating the costs for each unit (e.g., a cake) that is produced. For example, labor is purchased (in hourly wage form) from workers that have the skills to produce the good. If prices for these inputs increase (e.g. if wages increase), the cost per unit produced also increases. If costs per unit increases, then the profit for each unit will be smaller and firms will tend to produce less at every price. Therefore, the costs of inputs have a negative impact on supply - if input costs increase, the supply will decrease.

A supply curve shows how quantity supplied will change as the price rises and falls, assuming ceteris paribus so that no other economically relevant factors are changing. If other factors relevant to supply do change, then the entire supply curve will shift. Just as we described a shift in demand as a change in the quantity demanded at every price, a shift in supply means a change in the quantity supplied at every price.
In thinking about the factors that affect supply, remember what motivates firms: profits, which are the difference between revenues and costs. A firm produces goods and services using combinations of labor, materials, and machinery, or what we call inputs or factors of production. If a firm faces lower costs of production, while the prices for the good or service the firm produces remain unchanged, a firm's profits go up. When a firm's profits increase, it is more motivated to increase output, since the more it produces the more profit it will earn. When costs of production fall, a firm will tend to supply a larger quantity at any given price for its output. We can show this by the supply curve shifting to the right.

Take, for example, a messenger company that delivers packages around a city. The company may find that buying gasoline is one of its main costs. If the price of gasoline falls, then the company will find it can deliver messages more cheaply than before. Since lower costs correspond to higher profits, the messenger company may now supply more of its services at any given price. For example, given the lower gasoline prices, the company can now serve a greater area, and increase its supply.
Conversely, if a firm faces higher costs of production, then it will earn lower profits at any given selling price for its products. As a result, a higher cost of production typically causes a firm to supply a smaller quantity at any given price. In this case, the supply curve shifts to the left.