1. 1 Supply Schedule Price change – quantity supplied changes Q P S

2. 2Supply Table - for Supply Curve PriceQuantity 10 10 20 20 30 30 P Q 20 30 10 S

3. 3 Supply One Variable -- Change in Price One Variable -- Change in Price Other variables constant Other variables constant More than one – Shift in Supply Curve More than one – Shift in Supply Curve Price of inputs Price of inputs Land -- rent Land -- rent Labor – wages Labor – wages Capital – interest Capital – interest Entrepreneur -- profit Entrepreneur -- profit Technology Technology Taxes Taxes Expectations Expectations

4. 4 Market Supply Sum of Individual Supply This is different from aggregate supply Add up supply for each producer of a specific product Q P S2 30 S1 MS 20 1545 20 25 10 Q P

5. 5 Supply Schedule Relationship between price and quantity (supplied) Elasticity – how responsive to change Cost – factors of production – how much P Q S2 S1 S3

6. 6 Demand and Supply Q P S D PePe QeQe

7. 7 Shifts of Supply and Demand Q P S D S2 Pe Qe Pe Qe

8. 8 Supply and Demand Excess ? Q P S D PePe QeQe Supply Excess ? Demand

9. 9 Events and Shifts What happens if Drought in Kansas Tax on SUV’s Other Examples Study Figure 5.3 (a-c) Study Table 5-1

10. 10 The drought shifted the supply curve to the left. At P 0 quantity demanded > quantity supplied. Price rose to P 1 until the quantity demanded equaled the quantity supplied. Q1Q1 P1P1 D S0S0 Q0Q0 P0P0 S1S1 Excess Demand What happened when there was a drought in Kansas?