Supply Supply and Demand: Crash Course Economics #4 Demand and Supply Explained- Econ 2.1 Demand and Supply Explained (2 of 2) - Econ 2.2 Principles of supply are similar to demand. However, right now we’re looking at the producers’ side of things: How much they are willing and able to sell at a given price.

Understanding Supply Principles Supply: the amount of a good or service that producers are willing and able to sell at all prices in a given period In order to be part of the supply for a product, two things must be true: The producer must be willing to sell the product The producer must be able to sell the product Law of demand: Producers will want to sell more at a higher price and less at a lower price

Understanding Supply Principles Quantity Supplied: the amount of a good or service that producers are willing and able to sell at a specific price Law of Supply: as prices increase, the quantity supplied increases and vice versa Law of demand: Producers will want to sell more at a higher price and less at a lower price

Supply and Price Interactions Suppy can be influenced by price. Affects the willingness to sell a product at different prices Supply Schedule: Shows how prices influence supply by listing the quantities of a good that one producer will sell at different prices. Demand influenced by price So we just talked about this right? This is basically the law of demand. Price affects how much of something people would be willing and able to buy something Demand schedule is basically just a table that shows what an individual is willing to buy at different prices. On one side it’ll list the different possible prices of a product. On the other side, it’ll list how much that individual is willing and able to buy at those listed prices. An example is on the next slide. A demand curve is a graphical representation of what was listed in the demand schedule.

Supply Curve: Also shows how prices influence supply by graphing the data listed in a supply schedule. As price changes, the quantity supplied moves along the supply curve.

Personal supply: the supply of just one producer Supply Schedule Market Schedule Personal supply: the supply of just one producer Market supply: the sum of all the individual quantities supplied in a market Tyler the Taco eater: Jasmine is the one supplying him with tacos. She is the producer, so we’re looking at how much she willing to sell at different prices.

What Causes Supply to Change? Supply Shifters: factors that can causes a change in the supply of a good or service (very similar to demand shifters) (S) Changes in government policy (P) Changes in profit opportunities (I) Changes in the cost of inputs (T) Changes in technology (E) Changes in the number of suppliers (N) Changes in producer expectations Changes in the cost of inputs: any change in the cost of a factor of prodcution (land, labor, capital). Lower production costs increases profit. Higher profits are an incentive to produce more. Supply curve shifts right since it’s an increase in quantity supplied. Changes in the number of producers: Producers enter a market when they think there is profit to made. Same principle applies like in change in the number of consumers. An increase in producers in a market causes the supply curve to shift right. Changes in profit opportunities: If there is money to made elsewhere or with another product, supply curve will change. Changes in technology: technological advancements can increase productivity, resulting in an increase in supply. Also reduces amount of labor needed to produce a good, thus reduces cost, connects to changes in cost of inputs. Changes in producer expectations: If a producer expects a change in price for their product, depending on an increase or decrease, producers may either want to take some of their supply and store it for a later time when they expect prices to go up. The inverse is true if producers expect prices to fall in the future, they may want to sell as much as possible to make a profit before price falls. Changes in government policy: 2 ways: offering subsidies (cash payment aimed at helping a producer to continue to operate). Connect to episode of Parks and Rec with video store. Impose excise tax on a good to reduce supply. It increases production cost.

Graphing the Changes in Supply Changes in supply happen when quantities change at ALL prices. Supply can increase or decrease Always affected by outside factors Supply shift: when the curve moves NOT affected by price Supply decrease, supply curve shifts LEFT Supply increase, supply curve shifts RIGHT

DECREASE in supply shifts the supply curve LEFT INCREASES in supply shifts the supply curve RIGHT

When Demand and Supply Mix Equilibrium Equilibrium: the point where quantity supplied meets quantity demanded quantity demanded = quantity supplied Equilibrium Price: the price at which equilibrium is achieved aka “market-clearing-price” S Price Equilibrium: everybody gets what they want Equilibrium price: market is cleared of all surpluses and shortages D Quantity

Remember!! The DEMAND line always runs DOWNWARD. The SUPPLY line always runs UPWARD.

Works Cited http://www.businessstudynotes.com/others/economics/law-of-supply-movment-in-supply-curve/ https://www.emaze.com/@AFQRQQLF/Supply-in-Economics