What does fixed supply mean? Tell what a fixed supply curve looks like and what its appearance means.

Mark this and return

Save and Exit

Neli

Submit

The offer is defended as that property ready to be disposed of in exchange for a price. When market conditions are characterized by the combined price of all the market price and supply pairs, they form the so-called supply curve.

Therefore, the supply curve must be differentiated from a current offer or quantity supplied (which in general would be a specific point of said offer), which refers to the quantity that producers are willing to sell at a certain price.

Explanation:

The supply curve is the one that shows the link between the price of one or two goods and the quantity offered. The slope of this curve determines how supply increases or decreases when there is a decrease or increase in the price of the good. The elasticity of the supply curve refers to the percentage variation experienced by the quantity offered of a good when its price varies by 1%, keeping the other factors that affect the quantity supplied constant.

Sometimes the supply curves do not have an increasing slope. An example is the labor market supply curve. Generally, when a worker's salary increases, he is willing to offer a greater number of hours of work, because a higher salary increases the marginal utility of work (and increases the opportunity cost of not working). But when such remuneration becomes too high, the worker may experience the law of diminishing returns in relation to his pay. The large amount of money he is making will make another pay raise of little value to him. Therefore, after a certain point, he will work less as the salary increases, deciding to invest his time in leisure. This type of supply curve has been observed in other markets, such as oil: after the record price caused by the 1973 crisis, many oil-exporting countries decreased their production.