1. SUPPLY

2. YOU HAVE TO THINK OF YOURSELF AS A BUSINESS OWNER

3. Supply effects everything from ‘A’
What is Supply?
Supply effects everything
from ‘A’
Apples

4. TO Z What is Supply? Supply is the entire relationship
Zebras
Supply is the entire relationship
Between price and quantity supplied

5. Supply is the other side of the well-known economic “equation” of supply and demand.
An economic phenomenon

6. Not all firms produce/supply every product
Supply reflects only what suppliers are WILLING and ABLE to offer for sale.

7. SUPPLY
REFERS TO THE QUANTITES OF A GOOD THAT PRODUCERS ARE WILLLING AND ABLE TO SELL AT VARIOUS PRICES DURING A GIVEN PERIOD OF TIME

8. LAW of SUPPLY
HUMAN NATURE
…Desire for Profit…

9. Profit Motive SUPPLY Revenue > Cost of Production = Profit
Why is there a direct relationship between price and the quantity supplied.
Profit Motive
Revenue > Cost of Production = Profit

10. LAW of SUPPLY
That the higher the price, the greater the quantity supplied
When prices decrease, the quantity supplied is decreased

11. SUPPLY
The price of a product or service and the quantity supplied are directly related. P QS P QS

12. QUANTITY SUPPLIED
The amount a supplier is WILLING and ABLE to supply at a particular price, at a given time.

13. QUANTITY SUPPLIED
CHANGE IN PRICE (of the item) IS MOVEMENT ALONG THE CURVE

14. SUPPLY Supply schedule Supply curve
A list of the quantities supplied at each and every price when all other influences on selling plans remain the same.
Supply curve
A graph of the relationship between the quantity supplied and the price of the good when all other influences on selling plans remain the same.

15. SUPPLY

16. CHANGE IN PRICE (of the item) IS MOVEMENT ALONG THE CURVE

17. Determinants of Supply
A SHIFT IN A SUPPLY CURVE MEANS THAT AT EVERY PRICE, PRODUCERS SUPPLY A DIFFERENT QUANTITY THAN BEFORE

18. Determinants of Supply
SHIFT HAPPENS

19. Determinates of SUPPLY
Changes in Supply
A change in the quantity that suppliers plan to sell when any influence on selling plans other than the price of the good changes.
There is a new supply schedule and a new supply curve.

20. Price of inputs Supply Shift Left Price of inputs Supply Shift Right
Prices of Resources and Other Inputs
Resource and input prices influence the cost of production.
Price of inputs
Supply
Shift Left
Price of inputs
Supply
Shift Right

21. SUPPLY
Figure shows changes in supply.
1. When supply decreases, the supply curve shifts leftward from S0 to S1.
2. When supply increases, the supply curve shifts rightward from S0 to S2.
When you draw a shift of the supply curve, again be careful to draw the arrows in the horizontal direction. Follow the text by always describing shifts of supply curves as “rightward” or “leftward.” Do not say that the curves shift “up” or “down.” This description of a shift is especially confusing for the supply curve. A rightward shift of the supply curve makes it look as if the curve is moving lower. Students who do not think in terms of “rightward” and “leftward” believe this shift reflects a decrease in supply, which is wrong. Get the student to always go left and right and draw the shift arrows too.

22. Determinants of SUPPLY
The main influences on selling plans that change supply are
Prices of resources and other Inputs
Productivity/Technology
Expectations
Government tools
Number of sellers
Prices of related goods (R/S)

23. DETERMINANTS OF SUPPLY
Resource costs
(input/factor of production (CELL) costs)
Other goods’ prices
(substitutes in production and joint/related products)
Taxes/subsidies and regulations
Technology changes
Expectation of suppliers
Number of suppliers (competition)

24. Determinants of Supply
A SHIFT IN A SUPPLY CURVE MEANS THAT AT EVERY PRICE, PRODUCERS SUPPLY A DIFFERENT QUANTITY THAN BEFORE

25. CHANGE IN PRICE (of the item) IS MOVEMENT ALONG THE CURVE
A SHIFT IN A SUPPLY CURVE MEANS THAT AT EVERY PRICE, PRODUCERS SUPPLY A DIFFERENT QUANTITY THAN BEFORE

26. PRODUCERS
SUPPLY
FOR PROFIT
$$$$$$$$$$$$$

27. …PROFIT
the amount of money remaining after producers have paid all their costs

28. …PROFIT
occurs when revenues are greater than costs of production

29. Cost of production incorporates:
Rent/Mortgages
Wages and salaries
Interest on loans
Utility bills (electric, phone)
Raw materials
Any other goods and services used to manufacture a product

30. $$$$$$$The profit motive has a far reaching effect in free-enterprise markets.
It not only governs how individual companies make decisions, it also helps direct the use of resources in the entire market.