And with this summary, we conclude module 7. The module started by showing a marginal approach to arriving at the supply curve, which provides insight into why when the cost of production goes up (down), the marginal cost/supply curve shifts to the left (right). Similarly, a change to production in terms of technology or capital, also known as an exogenous change to supply, will cause the production function to shift and ultimately a shift in marginal cost/supply.
We also now know that the supply and demand curves provide much more information than the relationship between quantity and price. We can estimate the exchange of value between produces and consumers and how, depending on elasticity, the degree to which changes in price affect changes in quantity. This is very important if you are in business because your revenue and rents will depend on such changes.
You also now know a bit about supply chains – the links between markets where value is added. You can now look at any change in the market and estimate whether events will change supply or demand, how much and in what direction prices will changes, and the extent to which this will happen.