Supply The amount of a good or service that producers are willing and able to offer 2 Criteria must be present Must be willing to supply Must be able to supply *suppliers are only willing to supply products that make them a profit

Law of Supply The higher the sale price, the larger the quantity produced The lower the sale price, the smaller the quantity produced

Quantity Supplied The amount a supplier is willing and able to supply at a certain price Changes in price impact quantity supplied and these changes are represented by movement along the supply curve

Supply Schedule Shows the direct relationship between price and quantity supplied for a specific good. P Q 1 1 2 3 4 4

Supply Curve

Factors that Impact Supply Change in Technology Change in FOP’s/ Cost of Production Natural Disaster/Catastrophic Event The number of sellers Producer Expectations Government Subsidies

Change in Technology Why can you not find a VCR in the store? or VHS tapes? or Walkmans?

Change in FOP’s/Cost of Production Wages - Labor Gasoline prices – Capital Raw materials - Land

Natural Disaster/Catastrophic Event What are examples of natural disasters? WWII-rations 9/11

The Number of Sellers The more sellers, the greater the supply

Producer Expectations Producers make supply decisions based on the expectation that prices will rise or fall If producers expect higher prices in the future, producers would supply less to the market today If producers expect prices to fall in the future, producers will supply more to the market, hoping to make a profit before prices decrease.

Government Policies Subsidies Excise Taxes A cash payment aimed at helping a producer continue to operate Excise Taxes Tax on the manufacture or sale of a good