1. Chapter 5 Section 2

2.  Every time the supply of a good changes, the supply curve for that good “shifts” ◦ Meaning it moves either to the right or to the left ◦ Change in supply  Shift in supply curve ◦ Quick video on supply Quick video on supply

3.  If the supply increases the curve shifts to the right  If the supply decreases it shifts to the left

4. TThese factors cause a shift in supply curves: 1.Resource prices 2.Technology 3.Taxes 4.Subsidies 5.Quotas 6.Number of sellers 7.Future price 8.Weather EOC study guide Supply & Demand #6

5.  Resources are the factors of production— land, labor and capital ◦ When resource prices fall, sellers produce more of the good  Why? ◦ When resource prices rise, sellers produce less of the good

6.  Technology is the skills and knowledge used in production  An advancement in technology means sellers can produce more output with a fixed amount of resources ◦ This advancement lowers the per-unit cost, or average cost, of production

7.  Some taxes increase the per-unit costs ◦ Taxes are levied on the mining industry based on the value of good they are mining out of the ground ◦ Taxes are also imposed on the film industry  Taxes increases the cost of doing business and causes the manufacturer to supply less output.

8.  Subsidies are financial payments made by the government for certain actions ◦ $4 per bushel of corn (56 pounds) in 2014

9.  Quotas are restrictions on the number of units of a foreign-produced good (import) that can enter a country ◦ Imagine the Japanese are sending 1 million cars to the US each year and the US government imposes a quota on Japanese cars at 10,000 a year  What would happen in the market for cars?

10.  More sellers means more supply  Fewer sellers means less supply

11.  Sellers who expect the price of a good to be higher in the future may hold back the good now and supply the good to the market in the future  If the good is expected to be worth less in the future, sellers may dump their product on the market now

12.  Bad weather may reduces the supply of many agricultural goods ◦ Bad weather, such as a hurricane, may also damage fishing boats, oil refineries, etc  Unusually good weather can increase the supply ◦ The supply curve shifts to the… right

13.  Only one thing can cause a change in the quantity supplied PRICE

14.  Elasticity of supply is the relationship between the percentage change in quantity supplied and the percentage change in price  Elastic supply exists when the quantity supplied changes by a greater percentage than price  Inelastic supply exists when the quantity supplied changes by a smaller percentage than price  Unit-elastic exists when the quantity supplied changes by the same percentage as price