The difference between Change in Supply and change in Quantity Supplied

(hundreds of Greebes per week) $8 $7 $6 S $5 b PRICE per Greebe $4 a $3 $2 $1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 QUANTITY (hundreds of Greebes per week)

A change in price creates Movement from point a to point b

SLIDE Movement from point a to point b is a slide “on or along” the supply curve, resulting only from a change in price This is not a change in supply!!!!!!!!! only a change in quantity supplied because of a price change

Remember “Ceteris Paribus” Let’s change one of the conditions which we held constant when we established the original supply schedule for Greebes – these variables are referred to as the non-price determinants of supply

A change in the Non-price DETERMINANTS OF SUPPLY – results in a shift in the Supply Curve CHANGES THE QUANTITY SUPPLIED AT EACH AND EVERY PRICE

What does a Change in Supply look like? A SHIFT or new supply curve

(hundreds of Greebes per week) $8 $7 s2 $6 S $5 b PRICE per Greebe $4 s1 a $3 $2 $1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 QUANTITY (hundreds of Greebes per week)

I told you this would be hard… Review Time!!!! I told you this would be hard…

Daily Double

Compare 2000 with 2001. Which of the following statements is (are) true? Year Quantity Sold Price 2000 30,000 $10. 2001 50,000 $20. Demand has increased Quantity demanded has increased Supply has increased Quantity supplied has increased Supply has decreased A. I only B. V only C. I and IV only D. I and V only E. I, II and III only

Gotcha! Quantity demanded only increases or decreases by sliding along the demand curve When there is a change in demand, there is a new quantity demanded at each and every price The correct answer is C

s Price p d1 d Q Quantity

Non-price Determinants of Supply: Factors that shift the Supply Curve “ROTTEN”

“R” is for resource Changes in resource prices or input costs Elements of nature and political disruptions

Change in Prices of other goods produced and offered for sale “O” is for other Change in Prices of other goods produced and offered for sale

“T” is for technology Changes in technology

Changes in taxes and subsidies “T” is for taxes Changes in taxes and subsidies

“E” is for expectations Change in expected future prices, (producer) expectations

“N” is for number Change in the number of suppliers in the market Elements of nature and political disruptions

Non-price DETERMINANTS OF SUPPLY Changes in resource prices or input costs Elements of nature and political disruptions Change in Prices of other goods produced and offered for sale Changes in technology Changes in taxes and subsidies Change in Expected future prices (producer) expectations Change in the number of suppliers in the market

Quick tip Any factor that increases the cost of production decreases supply Any factor that decreases the cost of production increases supply