1. Chapter 3-Presentation 2 SUPPLY http://www.youtube.com/watch?v=JWdZEum NRmI&ob=av2n

2. Supply A schedule or curve showing the various amounts of a product that producers are willing and able to make available for sale at each of a series of possible prices during a specific period

3. Law of Supply As prices rise, the quantity supplied rises… as prices fall, the quantity supplied falls Direct relationship between price and quantity supplied

4. Supply Curve Upward sloping from left to right showing that as the price increases, companies are willing to provide more of good in order to increase profit Remember--- “supply to the sky” ***y-axis is price, x-axis is quantity supplied Be sure to label supply curve S, S1, S2 etc.

5. Individual Supply 6 5 4 3 2 1 0 Quantity Supplied (bushels per week) Price (per bushel) PQsQs $5 4 3 2 1 60 50 35 20 5 Individual Supply P Q S1S1 Supply Can Increase or Decrease S2S2 S3S3 An Increase in Supply Means a Movement of the Line A Movement Between Any Two Points on a Supply Curve is Called a Change in Quantity Supplied 2 4 6 8 10 12 14

6. Determinants of Supply R- Resource Prices- Inputs that go into making a g/s O- Other Goods’ Prices - Substitutes (milk/cheese) in production and joint products (mulch/lumber) T- Taxes and Subsidies T – Technology Change- increased/decreased efficiency E- Expectations of Suppliers- expect. of future prices N- Number of Sellers- more suppliers = higher S

7. Equilibrium Price The price where the intentions of buyers and sellers meet Quantity Demanded = Quantity Supplied

8. Equilibrium Quantity The quantity demanded = quantity supplied QD and QS at the equilibrium price

9. Equilibrium Price and Quantity Equilibrium exists where the two graphs meet

10. Graph: Increase in demand, supply constant (New E price? Quantity?) Equilibrium Price: Equilibrium Quantity:

11. Graph: Decrease in Supply, Demand stays Constant (New Equilibrium Price/Quantity? ) Equilibrium Price: Equilibrium Quantity:

12. People Suddenly prefer Fords over VW Price: Quantity:

13. 4 New Sub Shops Open In Mayfield Equilibrium Price: Equilibrium Quantity:

14. The Price of cheese goes down, show the effects on the pizza industry Equilibrium Price: Equilibrium Quantity:

15. People for Some Reason move away from Cleveland Equilibrium Price: Equilibrium Quantity:

16. Government Raises Business Taxes Equilibrium Price: Equilibrium Quantity:

17. Consumers in May Expect a Drought in August Hurting Oranges Equilibrium Price: Equilibrium Quantity:

18. Labor Unions Negotiate Higher Wages for Auto Workers Equilibrium Price: Equilibrium Quantity:

19. Supply Increase; Demand Decrease Supply Decrease; Demand Increase Supply Increase; Demand Increase Supply Decrease; Demand Decrease Tough Ones PriceQuantity ? ? ? ?

20. Surplus The amount that the QS exceeds the QD at a certain price (above the equilibrium)

21. Shortage The amount the QD exceeds the QS at a certain price (below equilibrium)

22. Price Floor A minimum price fixed by the government A price at or above the floor is legal, but anything below it is illegal Ex- Minimum Wage, Agricultural prices

23. Price Ceiling A maximum price a seller may charge for a product or service Ex- rent controls

24. Market Equilibrium 6 5 4 3 2 1 0 2 4 6 8 10 12 14 16 18 Bushels of Corn (thousands per week) Price (per bushel) PQdQd $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 Market Demand 200 Buyers PQsQs $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 Market Supply 200 Sellers 200 Buyers & 200 Sellers 7 3 D S $4 Price Floor 6,000 Bushel Surplus

25. Market Equilibrium 6 5 4 3 2 1 0 2 4 6 8 10 12 14 16 18 Bushels of Corn (thousands per week) Price (per bushel) PQdQd $5 4 3 2 1 2,000 4,000 7,000 11,000 16,000 Market Demand 200 Buyers PQsQs $5 4 3 2 1 12,000 10,000 7,000 4,000 1,000 Market Supply 200 Sellers 200 Buyers & 200 Sellers 7 3 D S $2 Price Ceiling 7,000 Bushel Shortage