1. AGENDA Wed 2/8 & Thurs 2/9 Review Demand Quiz Diminishing Marginal Productivity “Lucy! You’ve got some ‘splainin’ to do!” Amazing Tortilla QOD #11: Farmer’s Quandary Supply Shifts & Graphing Practice HW: pg 105 #1-9 – Study for Supply Quiz Looking for S&D Project P2

2. Diminishing Marginal Productivity Additional units of inputs (resources) result in diminishing marginal amounts of additional output increases As you watch the episode from “I Love Lucy,” write down all the examples of DMP.

3. QOD #11: Farmer’s Quandary How does a higher price in diesel fuel result in a decrease in the supply of bread? Support your answer by drawing a graph.

4. Supply Curve Shifts a rightward shift means that sellers are willing and able to produce and offer to sell more of a good a leftward shift means that sellers are willing and able to produce and sell less of a good.

5. Supply Curve Shifts Exhibit 4-3 Supply  then Supply Curve shifts rightward  Supply  then Supply Curve shifts leftward

6. Factors that Cause a Supply Curve Shift Resource prices Technology Taxes Subsidies Quotas Number of Sellers Weather

7. Supply Curve Shift Factors resource prices: land, labor, capital, and entrepreneurship – when resource prices fall, sellers are willing and able to produce and offer to sell more of a good – P  S shifts  – when resource prices rise, sellers are willing and able to sell less of a good – P  S shifts 

8. Supply Curve Shift Factors Technology is the body of skills and knowledge relevant to the use of resources in production – advancement in technology is the ability to produce more output with a fixed amount resources – technology lowers the per-unit cost, or average cost, of production

9. Supply Curve Shift Factors Taxes is a financial payment made to government – some taxes increase per-unit costs – this causes the manufacturer to supply less output – the supply curve shifts to the left

10. Supply Curve Shift Factors a subsidy is a financial payment made by government for certain actions – subsidies have the opposite effect of taxes – because of the subsidy, the quantity supplied is greater at each price, and the supply curve shifts to the right – removing the subsidy shifts supply left

11. Supply Curve Shift Factors quotas are restrictions on the number of units of a foreign-produced good (import) that can enter a country – ex: Chinese clothing entering EU markets number of sellers entering (or leaving) the market weather may affect the supply – Hurricane Katrina and oil

12. Change in Supply v. Change in Q S (a) change is supply refers to a shift in the supply curve – S 1 to S 2 (b) change in quantity supplied refers to movement along a given supply curve – A  B along supply curve S 1 (See Pg. 99)