1. Supply
Unit 2

2. Opener: 10/12/17
Copy the definition Supply - refers to the various quantities of a good or service that producers are willing to sell at all possible market prices. law of supply - producers will normally offer more for sale at higher prices and less at lower prices. supply schedule - a table that shows the quantities producers are willing to supply at various prices.

3. An Introduction to Supply
Supply refers to the various quantities of a good or service that producers are willing to sell at all possible market prices.
Supply can refer to the output of one producer or to the total output of all producers in the market.
Producers offer different quantities of a product depending on the price that buyers are willing to pay.

4. An Introduction to Supply (cont.)
Like quantity demanded, quantity supplied varies according to price, but in the opposite direction.
As the price for a good rises, the quantity supplied rises and the quantity demanded falls.
As the price falls, the quantity supplied falls and the quantity demanded rises.

5. An Introduction to Supply (cont.)
The law of supply holds that producers will normally offer more for sale at higher prices and less at lower prices.
Higher prices mean higher profit for producers.
Higher profits are an incentive to produce more.

6. An Introduction to Supply (cont.)
A supply schedule is a table that shows the quantities producers are willing to supply at various prices.
A supply schedule shown as a graph is a supply curve.
In the graph, prices are listed on the vertical axis and quantities on the horizontal axis.

7. An Introduction to Supply (cont.)
Unlike a demand curve, a supply curve normally slopes upward.
This reflects the fact that suppliers are generally willing to offer more of a product at a higher price and less at a lower price.

8. An Introduction to Supply (cont.)
Businesses provide goods and services hoping to make a profit.
Profit is the money a business has left over after it covers its costs.
Businesses try to sell at prices high enough to cover their costs with some profit left over.
Profit is the primary goal for business owners in our economy.

9. An Introduction to Supply (cont.)
Producers can choose to use their profits to increase wages or hire new workers.
They can invest it back into the business by purchasing new space or equipment.
The owners can also keep the profits for themselves.

10. Graphing Market Supply
The market supply is the total of the supply schedules for all providers of the same good or service.
The market supply curve slopes upward, like individual supply curves do.
This upward slope shows that all producers in the market would prefer to offer more of the product for sale at higher prices and less at lower prices.

11. Graphing Market Supply (cont.)
Price has the most influence on the quantity supplied.
For example, you would probably be willing to supply more of your labor at a high wage than at a low one.
Other factors also affect supply.
If any factors change other than price, a change in supply will occur.
That is, the entire curve will shift.

12. Changes in Supply
A change in supply occurs when producers offer a different quantity of output at each possible price.
This might happen because of changes in the cost of production, in government policies, in the number of producers, or in the expectations of businesses.
When supply goes down, the supply curve shifts to the left.
When supply goes up, the supply curve shifts to the right.

13. Changes in Supply (cont.)
Businesses use the four factors of production to produce goods and services.
When prices of these resources fall, costs of production fall.
Producers are then willing and able to offer more of the product for sale at each price.
The supply curve shifts to the right.

14. Changes in Supply (cont.)
When prices of resources rise, production costs rise.
Producers then offer less of the product for sale at each price.
The supply curve shifts to the left.

15. Changes in Supply (cont.)
Productivity is the degree to which resources are being used efficiently to produce goods and services.
Workers are more efficient when they produce more output in the same amount of time.
This reduces the company’s costs. More products are produced at every price, which shifts the supply curve to the right.
When productivity falls, production costs go up.
The supply curve shifts to the left.

16. Changes in Supply (cont.)
Technology refers to the methods or processes used to make goods and services.
New technology can speed up ways of doing things, which can cut a business’s costs.
This pushes the supply curve to the right, showing that the business is willing to supply more at the same price.

17. Changes in Supply (cont.)
Government actions can affect the cost of production, causing a change in supply.
In general, tighter government regulations restrict supply, causing the supply curve to shift to the left.
Relaxed regulations lower the cost of production, shifting the supply curve to the right.
To businesses, higher taxes mean higher costs, pushing the supply curve to the left.
Lower taxes mean lower costs, shifting the supply curve to the right.

18. Changes in Supply (cont.)
A subsidy is a government payment to an individual, business, or other group for certain actions.
A subsidy paid to a producer lowers the cost of production.
This encourages current producers to remain in the market and new producers to enter.
When subsidies are repealed, costs go up, producers leave the market, and the supply curve shifts to the left.

19. Changes in Supply (cont.)
Producers’ expectations also affect supply.
If they expect strong consumer demand, they will produce more.
If they expect weak demand, they will produce less.
A change in the number of suppliers causes a change in market supply.
As more firms enter an industry, they increase the supply in the market, shifting the curve to the right.
If some suppliers leave, supply decreases, shifting the curve to the left.

20. Elasticity of Supply
Supply elasticity is a measure of how the quantity supplied of a good or service changes in response to changes in price.
If the quantity changes a great deal when prices go up or down, the product is said to be supply elastic.
If the quantity changes very little, the supply of that product is inelastic.

21. Elasticity of Supply (cont.)
Supply elasticity depends on how quickly a company can change the amount it makes in response to price changes.
Products that cannot be made quickly or that are expensive to produce tend to be supply inelastic.
Products that can be made quickly without large investments of money or skilled labor tend to be supply elastic.

22. Opener 10/13/16 Copy the definition
Profit - the money a business has left over after it covers its costs.
Productivity - the degree to which resources are being used efficiently to produce goods and services.
subsidy - a government payment to an individual, business, or other group for certain actions.

23. Will supply increase or decrease ___________________________________
Headline : The cost of rubber increases.
Product: Tires 
Which factor affecting supply is at play? _____________________________
Will supply increase or decrease ___________________________________
Draw a supply graph to demonstrate this  

24. Will supply increase or decrease ___________________________________
Headline: New technology used in producing tires results in increased efficiency in making the tires.
Product: Tires
Which factor affecting supply is at play? _____________________________
Will supply increase or decrease ___________________________________
Draw a supply graph to demonstrate this