Lecture
This lecture covers the fundamental concepts of supply and the determinants of willingness to accept (WTA) in market transactions. It begins by establishing the relationship between suppliers and demanders, emphasizing that suppliers have a minimum price they are willing to accept for their goods. The instructor discusses various factors influencing WTA, including production costs, technology, and market conditions. Specific examples illustrate how different production environments, such as agriculture and energy, affect WTA. The lecture also explores the implications of elasticity of supply, highlighting scenarios where supply is either very elastic or inelastic. The instructor explains how market prices are determined and how sellers with lower WTA are more likely to sell their products. Additionally, the concept of surplus is introduced, differentiating between seller surplus and consumer surplus. The discussion extends to strategic pricing and market competition, including instances where companies may sell below cost to eliminate competitors. Overall, the lecture provides a comprehensive overview of supply dynamics and the economic principles governing market behavior.