2. Supply

3. Definitions Supply is the amount of a product that would be offered for sale at all possible prices in the market.

4. If the price goes up: How much more of the product might be supplied to the market? How many more producers might enter the market with more of the product? If the price goes down: How much less might be supplied? Would some producers drop out?

5. The energy crises of the 1970s encouraged countries to look to nuclear reactors, fueled by uranium, as an energy source. They began to stockpile uranium. This caused the price of uranium to soar which resulted in increased exploration for uranium. Deposits were discovered in Africa, Australia and North America. Supply increased but slow development of nuclear power plants caused the prices to drop to 1/8 of the price by 1990.

6. Individual Supply Curve

7. Law of Supply Suppliers will normally offer more for sale at higher prices and less at lower prices.

8. Market Supply Curve Market Supply Curve shows the quantities offered at various prices by all producers in a market.

9. Market Supply Curve

11. Definitions Quantity Supplied – The amount producers bring to market at any given price. Change in Quantity Supplied – The change in amount offered for sale in response to a change in price.

12. Change in quantity supplied can be an increase or decrease.

13. Did you ever think of yourself as a product for sale?

14. Change in Quantity Supplied

15. The Global Economy Organization of Petroleum Exporting Countries OPEC adjusts production to counter changes in prices.

16. OPEC Adjustments Early 1990s – Booming Asian economy causes demand for more fuel. Fuel prices go up. Late 1990s, OPEC agreed to increase production to lower oil prices. 1998 – Asian economy collapses. Demand goes down. Result: oil glut and prices fell. In 2001, OPEC agreed to decrease production to increase oil prices.

17. OPEC responded to changes in the market by changing the quantity of the product supplied in order to manipulate the price. OPEC Adjustments