Warm-up True or False If only the price changes, the entire demand curve will move. Gaining or losing income will cause the demand curve to move right or left. The law of demand states that price and quantity demanded have an inverse relationship.

Supply Supply is the opposite of Demand. Supply is the quantity of goods or services that a producer is willing to and able to produce, or supply (How much is available)

Law of Supply Price and Quantity Supplied move in the same direction – they have a DIRECT relationship Producers are willing to supply more at a higher price and less at a lower price. Producers would lose money if they supplied a large quantity at a lower price Price Qty. Supplied

Supply Schedule Just like a Demand Schedule – represents prices and quantities producers are willing to supply. This is a supply schedule ice-cream cones. Because a higher price increases the quantity supplied, the supply curve slopes upward. Price Quantity $0.50 $1.00 10 $1.50 22 $2.00 40 $2.50 75 $3.00 100

Supply Curve The sUPply curve slopes UP Here’s what it looks like: 5 Price Supply 1 10 1 Quantity

Change in Quantity Supplied PRICE A change in price causes movement along the supply curve. It’s a change in the amount offered for sale in response to a change in price. P1 P2 Q1 Q2 QUANTITY

Market Supply That example was for one business. We can also look at total or aggregate supply, which is total market supply. Comparing aggregate supply to aggregate demand helps businesses make decisions about how much to produce and what price to charge.

Changes in Supply IRDL – it still applies! Increase Right Decrease Left When supply Increases, the curve moves to the Right, when it decreases the curve moves to the Left

Increase in Supply Here’s what it looks like when the Supply curve moves to the right because supply has increased 50 Supply 1 L Supply 2 Price R 1 5 Quantity

Decrease in Supply When supply decreases the curve moves to the left. 50 Supply 2 L Supply 1 Price R 5 Quantity

Supply Determinants T - Technology I – Input Prices (Factors of Production) N - Number of Producers in the Market T – Taxes and Subsidies E – Expectations of Future Prices Any factor that increases the cost of production decreases supply. Any factor that decreases the cost of production will increase supply.