Date: October 26, 2015 Topic: The Law of Supply Aim: How does supply impact decision making? Do Now: Write down date, topic, and aim.

YO BRO! I’LL BUY YOUR CUPCAKES FOR $5 EACH! YOUR CUPCAKES ARE THAT GOOOOD! FEED ME CUPCAKES! WOW! THAT GUY IS GOING TO PAY $5 FOR ONE OF MY CUPCAKES? I’M GOING TO START MAKING A BOATLOAD OF THESE THINGS!

Think about it You have to think like a business owner. If you see that the price of the good or service you produce is increasing, you are happy, now you are making more profit, so you will want to make more of it at higher prices to make more of a profit!

SUPPLY The amount of goods available.The amount of goods available. The higher the price, the larger the quantity produced.The higher the price, the larger the quantity produced. Describes how much of a good is offeredDescribes how much of a good is offered for sale at a specific price.

SUPPLY SCHEDULE Shows relationship between price and quantity supplied for a good. 1.) Price of slice. 2.) Number of slices supplied (by a pizzeria). Supply Schedule Price per slice of pizza Slices supplied per day $ $ $ $ $ $

MARKET SUPPLY SCHEDULE Relationship between prices and total quantity supplied by all firms in a particular market. Market Schedule Price per slice of pizza Slices supplied per day $.501,000 $1.001,500 $1.502,000 $2.002,500 $2.503,000 $3.003,500

Date: October 27, 2015 Topic: Elasticity of Supply Aim: How can we determine the elasticity of supply? Do Now: Multiple Choice Questions.

ELASTICITY OF SUPPLY A measure of the way suppliers respond to a change in price. When supply is elastic, a small increase in price has a big effect on supply. Price Supply

ELASTIC SUPPLY Businesses are flexible and can change their output levels fairly easily in response to a price change. Example: toy factory, clothing manufacturer, etc. These businesses can either produce more or less very easily.

INELASTIC SUPPLY Businesses cannot adjust their production levels to respond to a change in price. Examples: farms, oil, coal, etc. It is very difficult for them to change their output levels.

ELASTICITY OF SUPPLY AND TIME: Short run, Long run Short Run: supply is inelastic whether price increases or decreases. Long Run: supply becomes more elastic if the supplier has a long time to respond to a price change.

ORANGE GROVE Has difficulty adjusting to a change in price in short term. Orange tree takes several years to mature and grow fruit. If the price of oranges goes up, an orange grower can buy and plant more trees, but he will have to wait several years for his investment to pay off. In the short term, the grower could take smaller steps to increase output. For example, he could use a more effective pesticide. While this step might increase his output somewhat, it would probably not increase the number of oranges by very much.

SUMMARY: How does supply affect decision making?