 Identify how producers & product availability influence pricing  Analyze how the agreement between buyers & sellers set prices in the market  4A Objectives:  Define supply  Define the law of supply  Explain how changes occur in supply  And my God will meet all your needs according to his glorious riches in Christ Jesus. (Philippians 4:19)

 Supply: “the amount of goods & services business firms are willing & able to provide at different prices.” (65)  Law of supply: the higher the price consumers are willing to pay, the greater the quantity a firm will produce AND the lower the price consumers will pay, the smaller the quantity a firm will produce (65)  Supply schedule: “a tabular model noting the quantities of an item that suppliers are willing to produce at various prices.” (332)

 Supply curve: a graph of the information from the supply schedule  Change in quantity supplied: when a change in price changes the number of units supplied  Change in supply: the supply curve shifts as producers are willing to produce more (or less) of an item regardless of price.  Decrease in supply =leftward shift  Increase in supply =rightward shift  Go to WB p29

 1. Changes in technology  Improvements can either replace labor which reduces costs OR allow more items to be produced—the price could stay the same OR the company can produce the same amount at a lower price.

 2. Change in production costs:  If production cost go up a company needs to “decrease the quantity of what it provides at the same price.” (68)  3. Changes in the prices of related goods:  When the price people are willing to pay for a substitute rises, businesses are willing to sell more of it and may even decrease their production of the original product even though the price hasn’t changed. (71)

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 WANT, WANT, WANT!!!  And my God will meet all your needs according to his glorious riches in Christ Jesus. (Philippians 4:19)

 Objectives:  Explain the existence of the market equilibrium point  Describe the causes of surplus & shortage  Explain how the free market works to alleviate a surplus or shortage

 Market equilibrium point: “the point at which the demand curve & the supply curve for an item intersect” (329)  Market equilibrium price: “the price corresponding to the intersection of an item’s supply & demand curve; the price at which consumers are willing to buy the same quantity that suppliers are willing to produce” (329)

 Surplus: “an excess of unsold products resulting from a price above the market equilibrium price” (332)  Price floor: “a barrier preventing the price of an item from falling lower than a certain price” (330)  Shortage: “an insufficient supply of an item as a result of a price below the market equilibrium price” (331)  Price ceilings: “a barrier preventing the price of an item from rising above a certain price” (330) [rent in large cities]