1. Supply

2. EQ
What other factors other than price effect the supply and demand for goods and services?

3. Essential Terms
Law of Supply Cost of input Productivity Technology Taxes & Subsidies Producer expectations Government Regulations Number of Sellers/competition
Elastic vs Inelastic Supply

4. What is the #1 factor that drives the supply of a good or service
PRICE IS THE #1 FACTOR
REMEMBER IS ALL ABOUT THE MONEY!! THE MORE THE PRICE OF A GIVEN PRODUCT GOES UP, THE MORE A COMPANY WILL MAKE.
CHASE THE SWEEEEEEET MONEYYYYYYYYYYYY!!

5. The Price goes UP, Supply goes UP
Law of Supply
The Price goes UP, Supply goes UP
The Price goes DOWN, Supply goes DOWN
Why?

6. Cost of input/added resource
In order to maximize profits, producers must keep their costs associated with their Factors of Production down.
Any added cost will cause an increase in the cost of the good or service to rise.
What will happen if the price rises to much?

7. Productivity
Being able to produce more of a given product or service with current factors of production will increase the amount a Company can add to a given market and thus make more money.

8. Technology- Has 2 parts
1. Technology is tied to Productivity- As technology improves companies can make products faster and cheaper.
Ex. Think about humans being replaced by machines.
2. As technology improves (Products) become obsolete and thus we discontinue producing that product and shift all factors of production to a new product or service.
EX.

9. Taxes and Subsidies
Taxes- Can have a positive or negative impact on producers because it drives up the costs.
Ex. Take a look at your phone bill or your paycheck.
The Federal Government and State Governments pay money to producers “Subsidies” to continue to provide a product even at a loss and stay in business.
Ex. Wheat and corn are a staple of the American diet and if a farmer losses money on his crop in year 1, the Government will offset his loss by covering his loss. It does this to keep him growing wheat/corn in the future.

10. Producer expectations
A company/producer/supplier believes that their will be a bigger demand for their product or service and thus they will produce more of it.
Ex. Basketball shoes are more in demand___________?
Ex. Columbia jackets are more in demand___________?
Ex. Interactive notebooks are more in demand __________?

11. Government Regulations
Government Regulations, like taxes have a huge impact on business because of the added costs.
Ex. An increase in the minimum wage. Yup going overseas..

12. Number of Sellers/competition
Depending on how many producers/suppliers are in a given industry, it may not be worth starting or maintaining a business in that area.
Or its to hard to get into the market.
Ex. The LOZO BALL SHOE

13. Products or Services with Inelastic Demand and Supply.
Price has little or no impact on the Demand.
Few or no substitutes
Often a necessity
Price has little or no impact on the amount supplied
Little or no competition in the market

14. EQ:
What other factors other than price effect the supply and demand for goods and services?

15. The Profit
Learning Target: I can apply the Determinants of Supply to the Product or service.

16. Group assignment
Each group needs to take one of the Determinants of Supply and write a student friendly definition and provide examples for the class. These will be written by students in their notebooks.
This is the information they will be using for their test.

17. The Case of the EpiPen
justice-department-settlement.html?_r=0

18. At your table discuss your responses to the following questions:
1. Is the price of the EpiPen just simply an issue of supply and demand, not an issue of greed?
2. In a capitalist society/free enterprise system does the government have a role in determining/regulating prices?
3. As an investor would you be willing to take a reduction in your stock price to help in decreasing the price of the EpiPen?

19. Mylan According to CNBC for Mylan, EpiPen is a leading product.
$9.45 billion in revenue for 2015 — up from $7.7 billion
$1 billion in revenue comes from EpiPen, up from the $200 million in revenue at the time Mylan first acquired the devices.
Mylan expanded the market for EpiPens by getting them placed in schools and trying to get them mandated for all airlines flying in the United States,
Mylan didn't have to spend a nickel actually creating the product.

20. Believed true cost of Epipen
According to the Mercury News; leaving out the box, plastic trainer pen, pen clamp and sets of instructions, some engineers estimate that it really $6.90 to make two EpiPens.
The company’s chief executive, Heather Bresch, recently told a congressional committee her company pays $69 per two- pack to the firm that actually manufactures the EpiPen, Meridian Medical Technologies, a subsidiary of Pfizer.

22. Case study: Turing and Daraprim
In 2010 Daraprim cost only $1 a pill.
CorePharma bought the rights to market and distribute Daraprim in the U.S. from GlaxoSmithKline. Price hike to $13.50 a pill
In 2015, CorePharma sold the U.S. rights of Daraprim to Turing, which raised the price to a whopping $750 a pill. A 5000% increase.
Daraprim still only costs $1 or $2 a pill abroad. Turing only has the U.S. rights to distribute it.

24. Reflection:
Given the testimony of the two CEOs have you changed your position on any of the three question?