SOLUTION: example problems of supply function

Question 424121: example problems of supply function
Answer by MathLover1(20849) (Show Source): You can put this solution on YOUR website!

Supply Function indicates the relationship between the of the
commodity supplied and the of the commodity.

The of a supply curve is , as price
increases, quantity supplied increases and vice-versa.
The of the supply curve (0,b) represents the
at which an item will be supplied.

Normally, we put the good�s own price and cost into the supply function.
For the previous example that we use,
Qs=g(p, wage, capital cost)
When p increases, firms/producers want to produce more goods because it will provide them with more profit. When cost increase, produce would like to reduce their supply given same capital constraint.
So,
P increases ...=>... Quantity supplied increases along the supply curve.
Wage increases (cost increases) -=>-- supply curve shift to the left for same price.
An example of supply function:
Qs=178+40p-20w-60r
where of labor, for producer�s loan
When and

=
Suppose , then

=
So when , supply curve to the , which means that for a given price, producers will supply goods than before.

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