Pick up a Warm Up

Law of Supply

Supply= Producers willingness and ability to sell a good/service I’m ABLE to Supply because I have all the resources I need Hey Me TOO!!

Quantity Supplied= a specific amount that will be supplied per unit at a specific price –It refers to a specific point on the supply curve QS Quantity Supplied QS

Law of Supply = a direct relationship between price and quantity supplied –Quantity Supplied rises as Prices rise –Quantity Supplied falls as Prices fall I’m not making as many cookies because prices have fallen I’m making more of these metal thing-a- ma-giggies because the price has risen

Law of Supply If P ↑ then QS ↑ If P ↓ then QS ↓ T-Shirt Price $ 7.00 T-Shirt Price $ 13.00

Supply curve = illustrates the quantity supplied at each price by producers in the market TITLE

Supply Schedule (Table) = plot each point in the supply table on a graph and connect the points to derive the supply curve. Price per slice of PizzaQuantity Supplied $ $ $ $ $

Because supply increases as prices rise, the supply curve slopes upward and towards the right

Shifts in Supply

There are 2 types of changes in Supply 1. Movement ALONG the supply curve (QS) –Caused by a change in PRICE of the good or service

There are 2 types of changes in Supply 2. SHIFTS in the supply curve (S) –Caused by any NON-PRICE DETERMINANT Rightward Shift = An Increase in Supply Leftward Shift = A Decrease in Supply

What Causes Supply Curves to Shift? There are 5 Determinants: N C P E T umber of Sellers ost of Resources roductivity xpectations axes

What Causes Supply Curves to Shift? Number of Sellers Supply for a good in a market is related to the number of producers in the area –MORE producers INCREASES Supply –FEWER producers DECREASES Supply

What Causes Supply Curves to Shift? Cost of Resources Refers to the Cost of Land, Labor, & Capital –Resource Prices FALL, sellers Produce MORE –Resource Prices RISE, sellers Produce LESS Price Rises LESS Price Falls MORE

What Causes Supply Curves to Shift? Productivity Advancements in technology Technology enables more production with a fixed amount of resources Advances in technology will ALWAYS increase supply

What Causes Supply Curves to Shift? Expectations Expectations of Future Prices affects the CURRENT SUPPLY for goods –Expect the price to rise in the future, sellers will decrease current supply –Expect the price to fall in the future, sellers will increase current supply I Heard House Prices will FALL

What Causes Supply Curves to Shift? Taxes Refers to the Government’s influence –Tax: tax on the production or sale of a good –Subsidies: government payment that supports a business or market –Regulations: government’s intervention with price, quantity, or the quality of a good Because of Taxes I’m producing LESS. I Curse the day Taxes were invented

Practice!!!!!!! Market is for snickers  The cost of chocolate decreases

Practice!!!!!!! Market is for Shoes  An extra tax requires manufactures to pay a $2 tax for each pair it produces

Practice!!!!!!! Market is for Chickens  Due to genetic engineering chickens can be cloned

Practice!!!!!!! Market is for CDs  Ten music shops shut down as itunes increases its profits

Practice!!!!!!! Market is for Houses  The price of houses is expected to rise in three months

Practice!!!!!!! Market is for Broccoli  The US department of agriculture gave $12 million in subsidies to broccoli farmers

Practice!!!!!!! Market is for Televisions  Four new Japanese companies have been introduced

Practice!!!!!!! Market is for Barry Bonds Home Run Base Balls  The value of the baseballs are expected to fall in a month.

Practice!!!!!!! Market is for T-Shirts  The cost of cotton increases

Practice!!!!!!! Market is for Automobiles  A new machine is introduced that assembles cars faster