Supply

Law of Supply Suppliers will normally offer more for sale at high prices and less at lower prices WHY???

Supply Schedule The Supply Schedule is similar to the demand schedule: Price Quantity Supplied 30 9 25 8 20 7 15 5 10 3 2 Notice, though, that as price decreases, so does the quantity supplied

Supply Curve To obtain a supply curve, graph the Supply Schedule: Price Quantity Supplied 30 9 25 8 20 7 15 5 10 3 2

Greebe in his natural habitat Pretty Easy, Right? You Try It: Graph the supply schedule for Greebes: Price Quantity Supplied 100 25 80 20 60 15 40 10 5 Greebe in his natural habitat

Law of Supply The Law of Supply is the principle that suppliers will normally offer more for sale at high prices and less for sale at low prices. More simply, when someone sells stuff, he or she is trying to get the most amount of money for it.

Supply Curves Supply curves have a positive slope If the price of a product rises or falls, we have a CHANGE IN QUANTITY SUPPLIED(sound familiar?) Factors other than price cause a SHIFT IN SUPPLY

Determinants of Supply Cost of Inputs Productivity Technology Taxes & Subsidies Expectations Government Regulations Number of Sellers HOW DO EACH OF THESE FACTORS DETERMINE SUPPLY?

Change or Shift? Price of Greebes rises 40% Change in Quantity Supplied Factory workers at the Greebe factory go on strike for better wages Shift in Supply (to the left/decrease) Mr. Finstad retires and opens his own Greebe factory Shift in Supply (to the right/increase) Every newspaper prints a coupon for $10 off on the purchase of a Greebe

Elasticity of Supply Just like a Demand Curve, a Supply Curve can also be elastic The formula is the same: Es = %∆Qs % ∆P This will give you the slope of the supply curve Es > 1: Elastic Es = 1: Unit Elastic Es < 1: Inelastic

Quick Check Would McGrath’s Greebe Factory and Candy Warehouse rather charge $20 per Greebe or $40 per Greebe? What would prevent MGF&CW from charging $200 per Greebe? Wouldn’t that make the most money?

Equilibrium Law of Supply ≠ Law of Demand Suppliers want high prices Consumers want low prices This is why we have Black Friday

Equilibrium (2) If we plot a demand curve and a supply curve on the same graph, the point at which they meet is known as market equilibrium At market equilibrium, we can determine both the equilibrium price and the equilibrium quantity of a product

You Try Using your economics skills, determine the equilibrium price and quantity for Greebes. Demand Schedule Supply Schedule Price Quantity Demanded 100 5 80 15 60 25 40 35 20 45 55 Price Quantity Supplied 100 25 80 20 60 15 40 10 5

What Do You Get? Price Quantity