Chapter 5 Supply Objective Understand the concept of supply Be able to relate the concept of supply with the concept of demand Be able to synthesize supply and demand and apply that synthesis to relevant, real life examples and practice.

Supply The amount of goods available.

Law of Supply The tendency of suppliers to offer more of a good at a higher price How can this happen? Trends-if something is popular people will buy more and suppliers can charge more. This will not always last as people will also gravitate towards bargains Target Markets

Examples of the Law of Supply Every Christmas there is some sort of toy or product that everyone HAS to have….the result is that demand will temporarily outweigh supply. As a result the demand goes up, suppliers will offer more but at a higher price. Examples of this phenomena are:

Law of Supply (cont) Believe it or not; once upon a time all of the preceding characters/products commanded top dollar. The supplies were bumped up with an increase in price, since people had to have these items/products, they bought them anyway.

The Let Down Eventually the demand for these products will die out, as this happens so will the supply and the price.

The Mullett People used to pay lots of money for this..

Terms Quantity Supplied-the amount a supplier is willing and able to supply at a certain price Variable-a factor that can change; trends, popularity, ect Elasticity of Supply-a measure of the way quantity supplied reacts to a change in price Excise Tax-tax on luxaries

Supply Schedule A chart that lists how much of a good a supplier will offer at different prices.

Market Supply Schedule A chart that lists how much of a good all suppliers will offer at different prices.