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May 26, 2022 

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MARGINAL EFFICIENCY OF INVESTMENT: The anticipated rate of return on a capital investment project undertaken by a business firm. Businesses typically compare the marginal efficiency of investment, abbreviated MEI, on physical capital with interest rate returns on financial capital when deciding to undertake an investment project. Because different investment projects have different returns, businesses often have a range of alternatives projects from which to choose. Combining all projects throughout the economy gives rise to an investment demand curve relating investment expenditures to the interest rate.

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SUPPLY SPACE:

The area on or above a supply curve that indicates all possible price-quantity combinations acceptable to sellers. Buyers are willing and able to purchase any price-quantity combination that places them on or above the supply curve, but not above.
Supply space includes all combinations of price and quantity supplied that are acceptable to sellers. It includes every price down to the minimum supply price for a given quantity supplied. Alternatively, it includes every quantity up to the maximum quantity supplied for a given supply price.

Show Me The Space

Supply Space
Supply Space
The exhibit at the right illustrates the supply space for stuffed Yellow Tarantulas, a cute and cuddly stuffed creature from the Wacky Willy Stuffed Amigos line of collectibles. Supply space is the highlighted area above (and including) the supply curve. This space contains all price-quantity combinations acceptable to sellers.

More Than A Curve

While the supply side of the market is usually represented by a supply curve, the selling process is often best reflected by the entire supply space. Buyers can operate anywhere within this space. It could be on the supply curve itself or far above the line.

The supply curve actually only represents the lower boundary of the willingness and ability to sell. Invoking the observation that people prefer more to less means that the supply price on the supply curve is the lowest price, the minimum price, that sellers are willing and able to accept. However, sellers are also willing and able to receive more that the supply price for a given quantity. In fact, the higher the better.

Suppose, for example, that sellers are faced with selling 400 Yellow Tarantulas. They are willing and able to accept $25 each, the supply price on the supply curve. Higher prices, however, are also acceptable. Is $35 each acceptable? Certainly. How about $45? No question. Are sellers willing and able to accept as much as $100,000? Without a doubt. All of these prices place the sellers in the supply space.

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Recommended Citation:

SUPPLY SPACE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2022. [Accessed: May 26, 2022].


Check Out These Related Terms...

     | supply price | quantity supplied | law of supply | producer surplus | supply determinants | change in supply | change in quantity supplied | demand space |


Or For A Little Background...

     | supply | supply schedule | supply curve | market | quantity | price | opportunity cost | limited resources | economic analysis | exchange | scarcity | good | service | production |


And For Further Study...

     | market supply | competition | value | production possibilities | competitive market | efficiency | law of increasing opportunity cost |


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