SupplyNumberOfSellers

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SupplyNumberOfSellers

I’m ______________________ speaking to you from Joliet Central High School, room 377 for the Institute for the Teaching of Economics in All Subject Areas. You are listening to:The Institute for the Teaching of Economics in All Subject AreasVolume Three, Issue FiveDeterminants of Supply/Change in the Number of Sellers in the MarketDuring World War II, the Office of Price Administration (OPA) was given authority to ration, or distribute, many consumer goods such as auto tires, sugar, coffee, meat, butter, canned fruit and shoes. Consumers were issued ration books of coupons worth a certain number of points for categories of food or clothing. Once they had used up their points, they could not buy any more of those items until they got new ration books or traded coupons with neighbors. People got used to the shortages. Not only were great amounts of food being sent to the military, supplies of some imported foods were completely interrupted. Sugar, for example, became scarce when the Philippines, the major source of American imports, fell to the Japanese. Many shipping lanes were closed, making it hard to bring in tropical fruits or Brazilian coffee. According to economic theory, a decrease in the number of sellers in the market will cause supply to decrease. The drastic measures taken by the U.S. government as a result of the war effort eliminated many of the choices consumers enjoyed before U.S. involvement in the war. That is, the market for the consumer goods mentioned earlier, prior to the organization of the OPA, was driven by competition among sellers in the markets for these goods. The OPA had the effect of creating a monopoly in these industries for the purpose of winning the war. As stated earlier, a decrease in the number of sellers in the market will cause a decrease in supply. As a result, the supply curve will shift up and to the left. This shift will lead to an increase in price and a decrease in quantity supplied.


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