1. Chapter 5 Section 1 What is Supply?
ECONOMICS
Chapter 5 Section 1 What is Supply?

2. Chapter 5: Supply DEFINITION
Supply is the willingness and ability of producers to offer goods and services for sale.

3. Law of Supply:
Producers willing to sell more of product at higher than at lower price

4. The Law of Supply Example: Price and Supply
Smiths sell tomatoes at farmers’ market
willing to offer 24 pounds at standard price of $1 per pound
willing to offer 50 pounds at $2 per pound
willing to offer 10 pounds at 50 cents per pounds
not willing to supply any tomatoes below 50 cents

5. Supply Schedules Supply schedule is two-column table
Individual Supply Schedule
Supply schedule is two-column table
left-hand column lists various prices of a good or service
right-hand column shows quantity supplied at each price

7. Market Supply Schedules
Market supply schedule format similar to supply schedule
quantities supplied are much larger
market quantity supplied also depends on price
Market research used to create market supply schedule
some producers want to learn prices, amount offered by all in market

9. Applying Economics Concepts
Imagine that you own a health food store that sells several brands of nutrition bars. Create a supply schedule showing how many bars you would be willing to sell each month at prices of $5, $4, $3, $2, $1.

10. Supply Curves Individual Supply Curve
Supply curve is graphic representation of law of supply
Supply schedule and curve based on following assumption:
all economic factors except price remain the same

12. Supply Curves Market Supply Curve
Market supply curve differs in scope from individual supply curve
both constructed same way
Supply curves for all types of producers follow law of supply
will provide more at higher prices although costs more to produce more
Why?
higher prices signal potential for higher profits

14. Applying Economics Concepts
Use the supply schedule for nutrition bars you created earlier to create a supply curve.

15. Critical Thinking Why does a supply curve slope upward?
How is the law of supply similar to the law of demand? How is it different?
Focus on one item you buy regularly for which the price has changed. How did this change in price influence supply?

16. Critical Thinking
4. Create a market supply curve for skis using the market supply schedule below.
Price per Pair ($)
Quantity Supplied
500
600
425
450
350
325
275
225
200
150
125
100

17. Critical Thinking
5. Write a brief explanation of the graph you created in #4 6. Why might producers not always be able to sell their products at the higher prices they prefer? Think about the law of demand and supply and the different attitudes that consumers and producers have towards price. 7. How might the market resolve this difference?