Supply Mr. Bammel

What is Supply?  The amount of a product that would be offered for sale at all possible prices that could prevail in the market;  Do not forget, this is a behavior; not a number.  Supply is showing what would happen at various prices;

The Law of Supply  Because producers are out to make the greatest profit possible, it makes sense for them to see higher prices as a good thing;  Choose either for “P” to increase or decrease and then shade in what will happen to “QS” based off the change in price.

Two different ways to view Supply  Supply Schedule  a listing of the various quantities of a particular product supplied at all possible prices in the market

 Supply Curve  the graphical representation of the supply schedule;

The Market Supply Curve  Refer to page 114, read about Individual and Market Supply Curves and explain the difference between the two.

Quantity Supplied vs. Supply  Think back to what we talked about with demand, grab a partner and read about the difference between a change in quantity supplied and a change in supply. Use the two graphs and the space provided to show your understanding.

Factors Causing a change in Supply  Cost of Inputs  Productivity  Technology  Taxes and Subsidies  Expectations  Government Regulations  Number of Sellers

 Using the table, read pages and provide explanations in the first column for each of the following topics. Show your understanding of each of these topics and how they effect the producers ability to supply products.

Showing Shifts  In the second column, follow along with me as I show symbols to represent the information you just read about.

Elasticity of Supply  After you have drawn the graph representing all 3 types of elasticity of supply, in the box next to the graph explain the determinant of supply and how elasticity of supply is different than elasticity of demand.

The Theory of Production  All production requires land, labor, capital, and entrepreneurs in order to produce output (goods and services).  Deals with production in short and long run  Short Run  a period of production that allows production to change only the amount of the variable input called labor.  Long Run  a period of production long enough for producers to adjust the quantities of all their resources, including capital.

Law of Variable Proportions  Says that in the short run, output will change as one input is varied while the others are held constant.  Deals with the relationship between productive resources and the output of final products.  Economists like to only gauge one factor at a time…Why is that?

Production Function  Illustrates the Law of variable Proportions  Describes the relationship between changes in output to different amounts of a single input while other inputs are held constant.

Answer the following questions using Figure 5.5 of page 124  What is the one input that is changing on the table?  Explain in your own terms what the second column is telling us.  Explain in your own terms what the third column is telling us.

Three Stages of Production  On the table I provided, take notes and describe what is going on during all three stages of production.

Types of Costs  A business must analyze all the things that are a cost to the business: Land, Labor, Capital, and Entrepreneurship.  On the Graphic organizer, grab a different partner and explain each of the different types of costs associated with a business and then discuss with each other and give me examples for each category.

Types of Revenue  Businesses must establish the amount of output they plan to produce; they must have a measure of revenue in order to examine this factor.  Businesses have two ways of studying revenue, how is Total Revenue different from Marginal Revenue? Discuss this with a partner and write out in your own words the difference in the box provided.

Costs  After reading about cost, I would like for you to read about self-service gas stations and internet stores and explain to me how these businesses take into account cost principles.

Marginal Analysis  Examining the Cost and Benefits of every single decision.  All businesses take this examination step- by-step and find the exact point where your cost out-weighs your benefit; at that point they have gone too far.  All businesses and people desire for benefits to out-weigh your cost.

 Answer the final couple of questions associated with Marginal Analysis down at the bottom of the page.