1. Supply
Chapter 5

2. What is Supply?
Supply – refers to the willingness and ability of producers to offer goods and services for sale
Law of Supply – states that producers are willing to sell more of a good or service at higher price
(opposite of demand, in which buyers demand more of a LOWER priced item)

3. Supply Schedules & Supply Curves
Supply schedule – a table that shows how much of a good or service an individual producer is willing and able to offer at each price (see page 132)
Individual (one person) v. market (all producers)
Supply curve – graph that shows how much of a good or service an individual producer is willing to supply

4. Activities Complete restating and interpreting economic data worksheet
Complete supply curve worksheet on house cleaning/yard work

5. What Are the Costs of Production?
Marginal product – change in total product that results in hiring one more worker
Specialization – having each worker focus on a particular facet of production
Increasing returns – each new worker adds more to total output
Diminishing returns – each new worker causes total output to grow but at a decreasing rate (maybe they get in each others’ way, or not enough work to do, so it is a waste)

6. Production Costs
Fixed costs – expenses owners must incur whether they produce anything or not (rent/mortgage, management)
Variable costs – business costs that vary as the level of production changes (worker wages, supplies)
Total costs – fixed plus variable costs
Marginal costs – cost of producing one more of a unit

7. Earning the Highest Profit
Marginal revenue – added revenue per unit of output (how much will you make for each unit)
Total revenue – total income for goods sold (Price x Quantity)
Profit maximizing output – when producer realizes the greatest amount of profit

8. Activity:
Complete Production Costs and Revenues chart

9. What Factors Affect Supply?
Input Costs
Labor Productivity
Technology
Government Action
Producer Expectations
Number of Producers

10. Activities:
Fill in Factors that Affect Supply on worksheet (you can work in groups/pairs)
Once finished, turn over and answer questions on back, identifying which factor is discussed in each statement

11. Robert Johnson:
Read about Robert Johnson and BET on page 152
What effects might BET’s success have on the supply of African-American programming?

12. What is Elasticity of Supply?
Elasticity of Supply – measure of how responsive producers are to price changes
Supply is more elastic over a longer period of time, when production can catch up with demand
Ease of changing production is main factor in changing supply.
It is easier to provide more dog walkers than cars

13. Supply Demand Review Video
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