Before we proceed further, we want to clarify the definition of trade we used in last week’s posts. We chose to regard trade as synonymous with exchange, but in most economic texts you’ll find exchange being used in context of ‘trade between individuals’ whereas trade is reserved for ‘trade between countries’. It’s not a big difference in our opinion but we thought it is an important one to clarify.
Now we move on to the Supply Curve. This is a very basic introduction to the idea of supply and what influences producers to increase or decrease their production. In the video I introduce a simple acronym “Pepper” that summarises these effects. This video and the previous one lay the important foundation for the rest of our analysis in microeconomics so do get a good understanding of them.