1. Producers and Supply

2. The Law of Supply Supply: The amount of goods available.
The Law of Supply: Producers supply more of a good or service when its price increases and less when its price decreases.
It’s all about producing for profit.
The Story of Levi Strauss

3. The Supply Schedule Price Quantity Supplied 50 115 45 100 40 85 35 7030 25 20 15 10 5

4. The Supply Curve

5. Elasticity of Supply
Elasticity of Supply: The higher the price offered, the more of a product sellers are willing to supply.
A measure of the way suppliers respond to a change in price.
Suppliers are more sensitive to some price changes than to others.

6. Elasticity of Supply (Cont’d)
The major reason that elasticity of supply varies is the variation in the costs of increasing production of different products.
Simple Products (Using common resources) – Elastic
Complex Products (Using complex resources) – Inelastic

7. Factors Influencing Supply
Producers can cut the cost of production by developing less expensive means of production; likewise, producers must shift to a more expensive method of production.
Prices of human, natural, and capital resources often change.
Suppliers will change their production in order to increase profits.