Transcript ECON_CH05_Supply

Warm Up #13
Sometimes the stores are all out of ____.
Explain how that makes you feel and
why does this happen that the store would
be out of _____.
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Class Focus
We the Senior Class of 2016 will complete ALL of
our assignments to best of our abilities and
behave appropriately in class.
We will respect all faculty, staff, substitutes,
classmates, especially Mr. Wilcox.
We will graduate on time May 20, 2016 and
become productive citizens in society.
NEXT
SSEMI2
You will be able to explain how the Law of Demand, the Law of Supply,
prices, and profits work to determine production and distribution in a market
economy.
B. Define the Law of Supply.
Determine and define vocabulary. Identify key terms within the
standard. Define each term.
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Scaffold understanding of the standard(s) and/or element(s). Paraphrase
the standard(s) and/or element(s). Rewrite the standard including
synonyms or brief definitions in parentheses and in a different color
following the key terms found in step 1.
You will be able to explain (clarify) how the Law
of Demand (want), the Law of Supply (amount),
prices, and profits (income) work to determine
production and distribution (delivery) in a market
(shop) economy.
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The Law of Supply
Nature of Supply
SSEMI2
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Nature of Supply
KEY CONCEPT
•
Supply is the willingness and ability of producers to offer goods
and services for sale.
WHY THE CONCEPT MATTERS
• Most people are producers. Doing household chores,
working at a job, providing rides to others are ways of
producing goods and services. Participating on a
team is a way of supplying skills, knowledge, and
support to one’s school. Producers incur (earn) costs
and receive rewards for the work they do.
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The Law of Supply
KEY CONCEPTS
•
Supply—willingness and ability of producers to offer goods,
services
•
Anyone who provides goods or services is a producer
•
Law of supply:
– producers willing to sell more of producer at higher than at lower
price
$ ↑, QS ↑
$ ↓, QS ↓ Direct Relationship
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What is the difference between
Supply and Quantity Supplied:
1. Supply—quantity of goods and services that producers
are willing and able to offer at various prices during a
given time period
2. Quantity Supplied—the amount of a good or service that
producers are willing to supply at each particular price
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Ralph Lauren’s
Polo Shirts
What is Supply?
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Nature of Supply
Law of supply:
More goods and services
are supplied when they can
be sold at higher prices, and
fewer goods and services
are supplied when they
must be sold at lower
prices.
$ ↑, QS ↑
$ ↓, QS ↓
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What causes producers to vary their supply of goods
and services?
Profit Motive
• The desire to make
money
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Profit
The amount of money
remaining after producers
have paid all of their costs
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Costs of Production
A business makes a
profit when revenues
are greater than costs
of production.
• Wages, salaries,
rent, loans, etc.
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What do supply schedules and
supply curves illustrate:
Supply schedule
• The quantity of a product that a producer is
willing to supply at various prices
Supply curve
• graphs the data shown in supply schedules
• indicates a product’s market over a specific
period of time
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Prices Relationship to Supply
Supply Schedule
Price of Socks
Quantity
Supplied
1
20
3
40
5
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Nature of Supply
Supply Elasticity
Indicates the extent to which price
changes affect the quantity supplied.
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Elastic Supply
*Small change in price causes a major change in the
quantity supplied:
– i.e. Sports teams T-shirts, posters, and hats
• Products can be made:
– Quickly
– Inexpensively, and
– Using a few, readily available resources
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Inelastic Supply
Exists when a change in a good’s price has little impact
on the quantity supplied.
– If a producer cannot increase supply regardless of
price. i.e. Gold, Land, Space Shuttles
• Products require a great deal of:
– Time
– Money
– Resources that are not readily available
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Closure Activity #11
Explain the differences between the terms in
each of these pairs:
• supply and law of supply
• supply schedule and supply curve
• market supply schedule and market supply curve
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Show What You Know!
Georgia Milestone Practice Question
The amount of a good or service that a producer is willing
to sell at various prices
Supply schedule
Law of supply
Supply
Profit
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Show What You Know!
Georgia Milestone Practice Question
The relationship between the price of a good or service
and the quantity supplied
Inverse
Direct
Profit
All of the above
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Show What You Know!
Georgia Milestone Practice Question
If a producer of a good cannot produce it fast enough for
consumers to purchase regardless of the price than that
product is said to have
Demand elasticity
Demand inelasticity
Supply elasticity
Supply inelasticity
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The End
Any questions?
Any questions?
Any Questions?
Any Questions?
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Warm Up #14
What happens to the supply curve
during the Labor Day holiday for sodas?
Explain what happens.
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Do the following assignment in your textbook.
Chapter 5 Section 1
Do Application Analyzing Effects pgs. 131, 133 & 136.
Analyze Graphs pgs. , 134 & 135
The NBA Goes International- Connecting Across the
Globe p. 136
Section 1 Assessment p. 137 2-5
Chapter 5 Section 2
Analyze Tables p. 139
Application Drawing Conclusions p. 139, 141, & 143
Section 2 Assessment 2-5
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Class Focus
We the Senior Class of 2016 will complete ALL of
our assignments to best of our abilities and
behave appropriately in class.
We will respect all faculty, staff, substitutes,
classmates, and especially Mr. Wilcox.
We will graduate on time May 20, 2016 and
become productive citizens in society.
NEXT
SSEMI3c
You will be able to explain how the Law of Demand, the Law of Supply,
prices, and profits work to determine production and distribution in a market
economy.
c. Define price elasticity of demand and supply.
Determine and define vocabulary. Identify key terms within the
standard. Define each term.
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
NEXT
Scaffold understanding of the standard(s) and/or element(s). Paraphrase
the standard(s) and/or element(s). Rewrite the standard including
synonyms or brief definitions in parentheses and in a different color
following the key terms found in step 1.
You will be able to explain (clarify) how the Law
of Demand (want), the Law of Supply (amount),
prices, and profits (income) work to determine
production and distribution (delivery) in a market
(shop) economy.
NEXT
Supply
Changes in Supply
SSEM13
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Changes in Supply
KEY CONCEPT
When a product’s supply shifts,
different quantities of products
are supplied at every possible
price.
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Acronym for
Non- Price Determinants of Supply
Come
Go
To
Papa John’s
Pizza
Right Now.
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Non-Price Determinants
supply shifts:
Competition
Government tools
Technology
Prices of related goods
Producer expectations
Resource prices
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Competition
A larger number of suppliers in a
market tends to increase the supply.
• A lack of competition tends to
decrease supply.
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Supply Shifts
Increase in SUPPLY
shift RIGHT
Decrease in SUPPLY
shift LEFT
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Government Tools
Tax—Required payment to the government
Subsidy— Payment to private businesses by the
government
Regulation- Rules about how companies conduct
business.
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Technology
New technology makes production more efficient
and less expensive.
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Prices of Related Goods
Means that the changes in a product’s price can
affect the supply for the product’s related goods.
• SUV/Gas
• Cereal/ Milk
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Producer Expectations
The expectations producers have of the future of
the price of their products can affect how much
of their products they supply to the market now.
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Resources (prices)
The most common determinant
• Includes raw materials
• Electricity
• Wages
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What Is Elasticity of Supply?
KEY CONCEPTS
• Elasticity of supply—measures producer
response to price changes
–Elastic—price change leads to larger
change in quantity supplied
• Inelastic—price change leads to smaller
change in quantity supplied
–Unit elastic—price and quantity supplied
change by same percentage
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Elasticity of Supply
EXAMPLE: Elastic Supply
• As product gains popularity, shortage
develops, price increase
• Producers can increase supply if:
–resources are easy to come by,
inexpensive
–production uncomplicated, easy to
increase
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Elasticity of Supply
EXAMPLE: Inelastic Supply
• Producers may not increase supply if:
–availability of resources limited
–production capacity cannot be increased
–shipping too costly, unavailable or
difficult to get
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Conclusion: What Affects Elasticity of Supply?
KEY CONCEPTS
• Main factor determining elasticity is ease of
changing production
– Given enough time, elasticity rises for most goods
and services
• Industries that respond quickly to rising or
falling prices:
– Do not need much capital, skilled labor, hard-toobtain resources
• Other industries need a lot of time to shift
resources
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Show What You Know!
EOCT Question
If an item is difficult to get, this market situation is an
example of
Demand elasticity
Demand inelasticity
Supply elasticity
Supply inelasticity
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The End
Any questions?
Any questions?
Any Questions?
Any Questions?
NEXT
Warm Up #15
Do Application Analyzing
Effects pgs. 131, 133 & 136.
Analyze Graphs pgs. , 134 &
135
NEXT
Class Focus
We the Senior Class of 2016 will complete ALL of
our assignments to best of our abilities and
behave appropriately in class.
We will respect all faculty, staff, substitutes,
classmates, and especially Mr. Wilcox.
We will graduate on time May 20, 2016 and
become productive citizens in society.
NEXT
SSEF6
You will be able to explain how the Law of Demand, the Law of Supply,
prices, and profits work to determine production and distribution in a market
economy.
c. Define price elasticity of demand and supply.
Determine and define vocabulary. Identify key terms within the
standard. Define each term.
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
________________________________________
NEXT
Scaffold understanding of the standard(s) and/or element(s). Paraphrase
the standard(s) and/or element(s). Rewrite the standard including
synonyms or brief definitions in parentheses and in a different color
following the key terms found in step 1.
You will be able to explain (clarify) how the Law
of Demand, the Law of Supply, prices, and
profits (proceeds) work to determine production
(manufacture) and distribution (spreading) in a
market economy.
c. Define price elasticity (springiness) of demand
and supply.
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Supply
Making Production
Decisions
SSEM12
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Why do producers look at Productivity when
making supply decisions:
A. to determine how efficiently their
resources are being used in production
B. to maximize efficiency
C. Increase profits
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Varying levels of input affects
the levels of output:
Adding levels of input increases productivity
up to a point and then eventually results in
decreased productivity and in negative
marginal product.
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Total Product
All of the product a company makes in a
given period of time- with a given amount
of input.
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Three Stages of Production
(Marginal Return):
A. Increasing Marginal Returns
• Each additional person increases production usually with
specialization.
B. Diminishing Marginal Returns
• Each additional person added increases production but
at a slower rate
C. Negative Marginal Returns
• Each additional person lowers total production
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Costs of Production:
Fixed Costs
• Rent, interest on
loans, insurance,
taxes, and salaries
• Overhead
– Costs except
wages
• Depreciation
– Decreasing value
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Costs of Production
Variable Costs
• Raw materials
and wages
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Costs of Production
Total Costs
• The sum of the
fixed and
variable
production
costs
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GM Assembly
Line workers
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Marginal Costs
It is the additional costs
The additional costs
of producing one more divided by the additional
product produced.
unit of output
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Earning the Highest Profit
KEY CONCEPTS
• Marginal revenue—money made from sale of
each additional unit sold
–same as price
• Total revenue—income from selling a product
–Total revenue = P (price) x Q (quantity
purchased at that price)
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Earning the Highest Profit
EXAMPLE: Production Costs and Revenues Schedule
1. To make most profit, owner decides number workers
hired, units made
2. To decide, owner performs marginal analysis
– comparison of costs, benefits of adding a worker,
making another unit
3. Profit-maximizing output—level of production yielding
highest profit
– marginal cost and marginal revenue are equal
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How does changes in production costs
affect producers’ supply decisions:
1. By determining the prices at which
producers supply quantities of goods or
services
2. By determining production goals
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Closure Activity #13:
Robert Johnson: Supplying African-American
Entertainment
EXAMPLE: Expanding the Number of Producers
•
•
•
•
•
Johnson recognized cable TV industry ignored African-American
market
1980, launched Black Entertainment Television: music, public affairs
Cable operators in U.S., Canada, Caribbean began to buy BET’s
shows
Started BET.com—number one Internet portal for African Americans
In 2001, Johnson sold BET, became first black billionaire
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The End
Any questions?
Any questions?
Any Questions?
Any Questions?
NEXT
TEST Tomorrow!!
Productivity
Supply
Quantity supplied
Profit Motive
Profit
Costs of production
Supply schedule
Supply curve
Supply elasticity
Elastic supply
Inelastic supply
Tax
Subsidy
Regulation
Total product
Increasing marginal returns
Diminishing marginal returns
Negative marginal returns
Fixed costs
Overhead
Depreciation
Marginal costs
Total costs
Marginal revenue
Total revenue
**Be able to shift the supply
curve left or right.
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