PRODUCERS AND SUPPLY

A. The Law of Supply 1. When a price of a good or service rises, producers will be willing and able to supply more! 2. Higher prices are incentives for producers to supply more 3. Supply, along with demand, helps set prices in a market economy

Example: Playstation Playstation 3 360 BG = $399 (2006) $399 Original Playstation  = $ 35 (1994) $299 PS3 = 41.6 million units sold PS2 = 141 million units sold Psone = 102.5 million units sold PSP = 60 million units sold

B. The Change in Supply 1. Supply for a good or service will shift over time 2. Supply = the amount of a good or service a producer is willing and able to produce at different prices 3. Cost of Production - costs for natural resources, capital and labor all must be paid for by producers 4. Availability of resources - if they are scarce, producer’s price will rise

C. Technology and Supply 1. Technology can increase supply - may be cheaper and faster to produce items 2. Supply curve would shift to the right if costs are lower

SUPPLY & TECHNOLOGY

SUPPLY: CONSOLES

THE SUPPLY CURVE The supply “curve” works opposite than demand. It slopes up from left to right. The supplier is more willing to supply more of a product as the price increases

D. Opportunity Costs Affect Supply 1. Phasing out old products for new ones that sell is an opportunity cost 2. Producers must examine costs, available technology, and other ways to guarantee profits

SUPPLY CHAIN – HOW IT GETS TO YOU

OPPORTUNITY COST….

OPPORTUNITY LOST Drop out of high school…….. Or graduate from college……….