The quantity that maximizes profit for the seller is the quantity q* satisfyingĠ = d d q p q − c ( q ) = p − c ′ ( q * ). The seller with cost c( q) of selling q units obtains a profit, at price p per unit, of pq – c( q). The pure effect of an increased price should be to increase the quantity offered, while the effect of increased expectations may be to decrease the quantity offered. We hold other things equal to focus on the effects of price alone, and then will consider other changes separately.
If the increased price is an indication that prices might rise still further, or a consequence of some other change that affects the seller’s value of items, then of course the higher price might not justify sale of the items. This is a good point at which to remind the reader that the economists’ familiar assumption of “other things equal” is still in effect. The seller might choose to sell more than 50, but if the first 50 aren’t worth keeping at a price of $10, then it remains true at $11. Generally, supply is upward sloping, because if it is a good deal for a supplier to sell 50 units of a product at a price of $10, then it is an even better deal to supply those same 50 at a price of $11. The supply curve gives the number of units that will be supplied on the horizontal axis, as a function of the price on the vertical axis Figure 2.4 "The supply curve" illustrates a supply curve. refers to the function that gives the quantity offered for sale as a function of price.
The term supply The function that gives the quantity offered for sale as a function of price.
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