In microeconomic theory, the partial equilibrium supply and demand economic model originally developed by Alfred Marshall attempts to describe, explain, and predict changes in the price and quantity of goods sold in competitive markets. The model is only a first approximation for describing an imperfectly competitive market. It formalizes the theories used by some economists before Marshall and is one of the most fundamental models of some modern economic schools, widely used as a basic building block in a wide range of more detailed economic models and theories. The theory of supply and demand is important for some economic schools' understanding of a market economy in that it is an explanation of the mechanism by which many resource allocation decisions are made. However, unlike general equilibrium models, supply schedules in this partial equilibrium model are fixed by unexplained forces.

Supply

---

Supply is the quantity that producers are willing to sell at a given price. For example, the potato grower may be willing to sell 1 million lb of potatoes if the price is $0.75 per lb and substantially more if the market price is $0.90 per lb. The main determinants of supply will be the market price of the good and the cost of producing it. In fact, supply curves are constructed from the firm's long-run cost schedule. Supply curves are traditionally represented as upward-sloping because of the law of diminishing marginal returns. This need not be the case, however, as described below.

Special cases of a supply curve

---

More on [ Supply and demand ]

ServiceMagic Media Articles


The Journal of Light Construction

Backfill: Still Grinding After 200 Years (JLC August 2008)
Still grinding after 200 years.
Business: Working the High-Rise Niche (JLC August 2008)
Working the high-rise niche
21st-Century Greek Revival (JLC August 2008)
Use PVC trim to create a durable version of this classic cornice.
Adding Under (Continued) (JLC August 2008)
Further details on how Danny Feig-Sandoval and his crew transformed a dirt crawlspace into new living space without disturbing the home's brick foundation.
JLC Extra Q&A: Compressing Fiberglass Batts (JLC August 2008)
Q: I've heard that if you use 5 1/2-inch-thick fiberglass batts in a 2x4 wall, the insulation will have a higher R-value than standard 3 1/2-inch batts provide. But some people say that compressing fiberglass batts lowers the R-value. What's the story?
Simple Sill Pans (Continued) (JLC August 2008)
Bill Robinson demonstrates how to fabricate a vinyl sill pan in this video supplement to his August article, "Simple Sill Pans."

Subscribe to Construction_and_Maintenance RSS feed