1. UNIT VI – Fundamentals of Economics
Supply
UNIT VI – Fundamentals of Economics

2. What is supply? Amount of goods sold at all possible prices
Opposite of demand
Usually refers to output of a single producer (individual supply)
Also possible to add supply all producers (market supply)

3. Law of Supply Opposite of the law of demand
As price increases, supply increases
As price decreases, supply decreases
The higher the price of a good, the greater the incentive is for a producer to produce more

4. Supply Schedule Numerical chart that illustrates the law of supply
Price
Quantity
$50
100
$30 70
$10 10 $5 1

5. Supply Curve
$50
$30
$10
PRICE
QUANTITY

6. Change in Supply Cost of Resources (Input costs) Labor Productivity
Technology
Government Policy
Subsidies and taxes
Producer Expectations
Example: if a producer expects prices to drop to low, they may decide to slow down production
Number of Producers/Competition

7. Changes in Supply Curve

8. Supply Elasticity
Measure of how the quantity supplied of a good or service changes in response to changes in price
Inelastic example: oil

9. Supply and Demand at Work Together
Surplus – too much supply
Shortage – too much demand
Equilibrium – point at which a balance between supply and demand are met

10. Supply and Demand Curve
$50
$30
$10
SURPLUS
PRICE
EQUILIBRIUM POINT
SHORTAGE
QUANTITY