1. Unit 3: Supply and Demand
Chapter 5: Supply

2. Supply = the amount of goods generally available
Introduction
Supply = the amount of goods generally available

3. Introduction Law of Supply firms are willing to produce
more as the price goes up
They can make bigger profits
firms are not willing to produce as much as the price goes down
They don’t make as much profit P S P S

4. Introduction Quantity Supplied
what the producers are able to produce at a certain price
what the producers are willing to produce at a certain price

5. Introduction Methods to Increase Supply Higher Production Market Entry
existing firms increase output
get more profit
Market Entry
new firms enter the market
they want to get some of those profits

6. The Supply Schedule it looks like a chart
shows what a firm is willing to produce when considering
price
quantity sold

7. The Supply Schedule Types individual supply schedule
what a single business is willing to supply at different prices
market supply schedule
what ALL of the businesses are willing to supply at different prices

8. The Supply Curve it looks like a graph
it gets its data from a supply schedule

9. The Supply Curve axes vertical horizontal slope always is Price
always rises from 0 to highest price
horizontal
always is Quantity
always has zero at left and highest price at right
slope
shows the Law of Supply
rises from left to right

10. Elasticity measures how people react to change in prices
if reaction is extreme, it is elastic
if reaction is slight, it is inelastic

11. Elasticity how time effects reactions
inelastic supply in SHORT TERM, but can react in LONG TERM
agriculture
must plant more
must wait for plants to begin to produce
big businesses (like car manufacturing)
must get new technology and training
must wait for new factories to be built

12. Elasticity elastic in SHORT TERM small businesses service industry
less capital needed to expand
less capital needed to enter the market