Supply Notes: Ch 5, Section 1 Monday, 3/24 Supply is the amount of goods _______________ –Production & Number of Companies Quantity supplied describes how much of a good is offered to purchase at a specific __________.

Price As price increases… Supply Quantity supplied increases Price As price falls… Supply Quantity supplied falls The Law of Supply According to the law of supply, suppliers will offer more of a good at a __________ price.

The promise of increased revenues when prices are ___________ encourages firms to produce more. Rising prices draw ______________ into a market and add to the quantity supplied of a good.

Supply Schedule Graph representing a supply schedule –Prices Vertical, Quantity Horizontal –Ceteris Paribus: “all other things constant” Supply Curve Table that lists the quantity supplied at different ____________ –Can be individual or whole market

$.501,000 Price per slice of pizza Slices supplied per day Market Supply Schedule

Pizza: market supply curve

Elasticity of supply is a measure of the way quantity supplied reacts to a change in price. Elasticity of Supply If supply is not very responsive to changes in price, it is considered inelastic. An elastic supply is very sensitive to changes in price.

Supply Change The ENTIRE curve moves Nothing to do with price Original Increase Decrease

Supply Changes - Input Price of resources change Technology increases productivity

Supply Changes - Government Subsidy – payment to support a business or market Excise Tax – tax on the production or sale of a good Regulation – intervention in a market that affects price, quantity or quality

Supply Changes – Global Economy Change in international markets that affects markets at home

Supply Changes – Future Expectations What supplies will expect the price to be in the future

Supply Changes – Number of Suppliers More suppliers increases supply Less supplies lowers supply