1. Agenda 1. Warm-Up 2. Discuss Determinants of Supply
3. Supply Headlines

2. Warm Up
Explain the difference between the goal of consumers and the goal of suppliers (producers).
Explain how the amount of profit a supplier makes can influence how much supply they make available.

3. How Many of you would you be willing and able to sell a Snickers bar to me right now for each price?
Quantity of Students
$ 0.25 1
$ 0.50 4
$ 1.00 7
$ 1.25 13
$1.50 18
$ 1.75 19
$ 2.00 20

4. Determinants of Supply
Six determinants of market supply that will shift the curve
Just remember the word STORES
S- subsidies and taxes
T- technology
O- other related goods prices
R- resource costs
E- expected future prices
S- sellers in the market (# of firms)

5. Subsidy and Taxes
If you change the taxes on a firm it will impact the supply of the good or service it produces
Higher tax- less supply
Lower tax- more supply
Subsidy- when the government gives $$ to a firm to help it
Why are businesses less inclined to sell their products if taxes go up?

6. Technology Changes
Breakthroughs in technology have created new products, improved existing products, and lowered the cost of production.
Almost all of the time, technology = more supply
Can you think of an example of a technology which lead to an increased supply?

7. Other Related Goods Price
A change in the price of a good that uses the same resources as another will impact the supply of both.
Assume soccer balls and footballs are made of the same resources.
an increase in the profitability of footballs will shift its supply right while simultaneously shifting soccer ball’s to the left
Besides footballs and soccer ball can you think of two other goods where this concept would apply.

8. Resources Prices
Any change in the costs of resources used to make a good will affect the supply of the good.
An increase in the price of a resource will reduce supply, meaning a leftward shift of the supply curve.
Decrease in resource price means more supply.

9. Expectations of prices by producers
Any change that affects producer expectations about profitability can affect market supply.
An expectation of higher prices in the future could either will decrease current supply in order for the producer to make more profit later.

10. Changes in the Number of Sellers in the Market
Less sellers: less supply of a good or service
More sellers: more supply

11. An Increase in the Market Supply for Pizza12 16 20 24 28
Millions of pizzas per week
$15 9 6 3
Price per pizza S S' g h

12. A Decrease in the Market Supply for Pizza12 16 20 24 28
Millions of pizzas per week
$15 9 6 3
Price per pizza
S'' S i g

13. Movements Along a Supply Curve Versus Shifts of a Supply Curve
A change in price, other things constant, causes a movement along a supply curve from one price-quantity combination to another.
A change in one of the determinants of supply other than the price causes a shift of a supply curve, changing supply.

14. Practice
Draw and label the supply curve for pizza. Determine whether there will be a shift in the curve or movement along it. If the curve moves, write down the proper determinant which shifted it.

15. Pizza Supply Curve 1. Tomato sauce becomes more expensive
 2. A number of pizzerias open
 3. The price for pizza increases
 4. A new oven is invented which can bake a pizza in half the time
 5. The price of pizza is expected to fall in the coming months
 6. More pizza is being produced
 7. A two for one special on all pizza is announced
 8. The government closes down a number of pizzerias