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October 1, 2022 

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REVENUE EFFECT: The goal of imposing taxes to generate revenue used to finance the operation of government, most notably to finance the provision of public goods. This is one of two reasons, and the primary reason, that governments impose taxes. The other reason is the allocation effect. Governments work the revenue effect because they need access to income and resources to build highways, defend the nation, educate the population, and maintain the legal system. They purchase these resources with tax revenue generated through the revenue effect.

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NUMBER OF SELLERS, SUPPLY DETERMINANT:

The number of sellers willing and able to sell a good, which is assumed constant when a supply curve is constructed. The number of sellers is one of five supply determinants that shift the supply curve when they change. The other four are resource prices, production technology, other prices, and sellers' expectations.
The number of sellers willing and able to buy a good affects the overall supply. The relation is relatively straightforward. With more sellers, there is more supply. With fewer sellers, there is less supply.

All in the Numbers

The overall market supply of a good is based on the combination of supplies offered by each seller. If five firms are each willing and able to sell 100 units of a good, at the going market price, then the total market supply is 500 units. If a sixth firm should enter the market, also willing and able to sell 100 units, then the total market supply increases to 600 units. If one of the five original firms should leave the market, then the total market supply decreases to 400 units. With more sellers, there is a greater supply. With fewer sellers, there is less supply.

Shifting the Supply Curve

Number of Sellers

A change in number of sellers causes the supply curve to shift. This can be illustrated using the positively-sloped supply curve for Wacky Willy Stuffed Amigos presented in this exhibit. This supply curve captures the specific one-to-one, law of supply relation between supply price and quantity supplied. The number of sellers is assumed to remain constant with the construction of this supply curve.

Now, consider how a change in the number of sellers shifts the supply curve.

  • More Sellers: If there is an increase in the number of sellers in the market, then the supply of the good increases. It is just that simple. This is seen as a rightward shift of the supply curve. Click the [More Sellers] button to demonstrate.

  • Fewer Sellers: If there is a decrease in the number of sellers in the market, then the supply of the good decreases. Which is also straightforward. This is seen as a leftward shift of the supply curve. Click the [Fewer Sellers] button to demonstrate.

The Competition of Numbers

The number of participants on the selling side of the market is extremely important when it comes to competition and market control. Market control depends on the number of competitors. Fewer competitors means more market control for each. More competitors means less market control for each. A given seller, in general, would rather have fewer participants on the selling side, which would then give it greater market control. Good for the seller. Of course, fewer competitors and greater market control also means less efficiency. Bad for the economy.

<= NUMBER OF BUYERS, DEMAND DETERMINANT


Recommended Citation:

NUMBER OF SELLERS, SUPPLY DETERMINANT, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: October 1, 2022].


Check Out These Related Terms...

     | supply determinants | resource prices, supply determinant | production technology, supply determinant | other prices, supply determinant | number of sellers, supply determinant | demand determinants |


Or For A Little Background...

     | supply | market supply | supply price | quantity supplied | law of supply | supply curve | change in supply | change in quantity supplied | ceteris paribus | production | competition | efficiency |


And For Further Study...

     | Marshallian cross | comparative statics | competitive market | market | producer surplus | short-run production analysis |


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