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Basic Economic Concepts
Supply and Demand Purpose: Identify changes in events that will result in a change in supply.
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I. Goals Correctly label and graph a supply curve and shift.
Identify an increase and decrease in supply. Identify the determinants of supply and their effect on the shifting of the supply curve.
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II. Determinants of Supply
Factors that will change supply regardless of price. Changes in Resource Prices Number of Sellers in the Market Government Intervention Prices of Other Goods Price Expectations
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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.
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II. Determinants of Supply
Number of Sellers in the Market: the more producers in the market the larger the quantity supplied.
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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
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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. Higher profits
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II. Determinants of Supply
Producer Expectations: their expectations of the future can impact their willingness to supply a product.
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