1. Basic Economic Concepts
Supply
Purpose: Identify changes in events that will result in a change in supply.
Standard: Benchmark 1.5

2. Goals Correctly label and graph a supply curve and shift.
Describe the Law of Supply.
Differentiate between revenue and profit.
Identify an increase and decrease in supply.
Identify the determinants of supply and their effect on the shifting of the supply curve.

3. I. Supply Supply: Law of Supply:
Units of a product offered for sale by producers
Law of Supply:
Producers will provide more a product when the price is higher and less when the price is lower

4. Total Costs = fixed costs + variable costs
I. Supply
Costs of Production:
Fixed Costs: costs that do not change, no matter how much of the product is produced.
Variable Costs: costs that rise and fall depending upon the quantity produced.
Total Costs = fixed costs + variable costs

5. The goal of firms is to maximize profit.
I. Supply
The goal of firms is to maximize profit.
Revenue = Profit + Total Cost
Profit = Revenue – Total Cost
The Office:

6. II. Determinants of Supply
Changes of Resource Prices:
change in the price of materials used to make a product will cut into profits and force producers to change supply.

7. II. Determinants of Supply
Number of Sellers in the Market:
the more producers in the market the larger the quantity supplied.

8. II. Determinants of Supply
Government Intervention:
by raising and lowering the cost of producing goods the government can encourage or discourage sellers.
Government payment to support a business or market
Ex. Subsidies on corn
Subsidies
Taxes placed on the sale or production of a good
Ex. Taxes on cigarettes
Excise Taxes

9. II. Determinants of Supply
Price of Other Goods:
when there is an increase in price for one of two products that require similar resources, sellers will switch production to more of the cheaper good.

10. II. Determinants of Supply
Producer Expectations:
their expectations of the future can impact their willingness to supply a product.