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I am reading "Principles of Economics" by N. Gregory Mankiw.

I think hot weather alters firms' desire to sell at some given price because hot weather increases the demand for ice cream.

Am I wrong?

Notice that when hot weather increases the demand for ice cream and drives up the price, the quantity of ice cream that firms supply rises, even though the supply curve remains the same. In this case, economists say there has been an increase in “quantity supplied” but no change in “supply.” Supply refers to the position of the supply curve, whereas the quantity supplied refers to the amount producers wish to sell. In this example, supply does not change because the weather does not alter firms’ desire to sell at any given price. Instead, the hot weather alters consumers’ desire to buy at any given price and thereby shifts the demand curve to the right. The increase in demand causes the equilibrium price to rise. When the price rises, the quantity supplied rises. This increase in quantity supplied is represented by the movement along the supply curve.

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  • $\begingroup$ I've never seen a company (for example, Baskin Robbins) increase the price of ice cream in the summer, and then reduce it in the autumn. $\endgroup$
    – RonJohn
    May 23, 2021 at 21:48

2 Answers 2

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Yes, you are wrong. As the quoted part explains,

In this case, economists say there has been an increase in “quantity supplied” but no change in “supply.” Supply refers to the position of the supply curve, whereas the quantity supplied refers to the amount producers wish to sell.

Are you willing to sell your current computer for say \$1 000? What is the lowest price that you are willing to sell for? (Just a ballpark estimate will do.)

If you came up with a number, you did that without knowing anything about the prospective buyers of your computer.

Of course it is very nice to be able to sell for more, if the customers are - for some reason - willing to paying more, but the ability to do this is determined by the equilibrium. The supply curve merely describes the vendors' preferences. What is the lowest price at which they are willing to sell / what quantity are they willing to sell if the price turns out to be X.

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    $\begingroup$ Giskard, Thank you very much for your answer. $\endgroup$
    – tchappy ha
    May 23, 2021 at 8:25
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As the passage says, the demand curve is affected, but the supply curve is not. In a monopoly model of supply firms, the demand curve might in turn affect the firm's willingness to sell at a particular price; if a monopoly sees that there's a lot of people willing to pay \$10, the firm may be reluctant to sell any at \$6 for fear it will undercut its ability to sell at $10. But in a competitive model of supply firms, the firms' willingness to sell is determined entirely by whether the price in question exceeds the cost, and does not depend on the demand curve. In a competitive market, a firm isn't going to refuse to sell at \$6 just because they think the potential customers would be willing to pay \$10; if they did, another firm would come along and sell at \$6 instead.

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