Supply

Law of Supply Producers tend to supply more of a good or service as prices for the good or service increase. As prices increase, the anticipated benefit to producers rises; the higher price acts as an incentive, encouraging producers to move more resources into production of the higher-value good or service. There is a positive relationship between price and supply.

Determinants of Supply Input prices: cheaper input prices, encourage production Technology: any improvement in technology will increase supply. Number of sellers: when more firms enter the industry, the supply increases. Expectations: changes in expectations about the future price of a product Natural disasters/unexpected events

Changes in the Supply Curve Change in Supply Something other than PRICE has caused a SHIFT in the supply curve Increase (shift to the right) Decrease (shift to the left) Change in QUANTITY SUPPLIED PRICE has caused a MOVEMENT along the supply curve Quantity refers to how many units of a good/service that firms are willing to supply Increase/Decrease in QS (movement along the supply curve)

The supply of cars when open-trade agreements bring in new producers. The supply of coffee when freezing temperatures hit major coffee-producing regions of Brazil and Costa Rica The supply of lumber when a new computer assisted saw reduces the cost of lumber production The supply of gasoline today if there is an expected shortage and higher prices likely to occur next week because of a major hurricane in the Gulf of Mexico.

How many hours are you willing to work? You have decided that you need to earn more money. You are considering applying for a part-time job. List the number of hours that you are willing to work per week at each of the hourly rates of pay. Assume a seven-day week, and remember that you must still attend school

What pattern do you observe in the responses above? Several students chose not to supply labor at any wage rate. Why? What influences your decision to work or not to work? Why does a higher wage usually increase the number of hours people are willing to work? Would you predict that a different group of people would fill out the questionnaire differently?