Transcript Supply - Images

CH. 7 Section 1
Supply
People
produce g/s to gain
benefits, whether it is money
income or psychic income.
Supply is from the PRODUCERS
prospective!
Suppliers want to sell their
products for the most money
possible in order to get the
highest profit possible.
Supply
= the quantities of a product
or service that a firm is willing and
able to produce for sale at different
prices.

http://www.mcdonalds.com/us/en/supplierstories.html#/Lettuce
 [Demand
is from the buyers perspective]
 [Supply is from the sellers perspective]
 Supply
Schedule = a
table that
shows the
relationship
between P and
QS of a g/s.
P
Q
$1
100
$2
200
$3
300
$4
400
Supply
Curve = graphic
illustration of a supply schedule
(EX: on overhead—include in notes)
Market
Supply = the total
quantity of a product or service
that all firms in a mkt. will make
available for sale at various prices
=add up all quantities that each
firm in the mkt would supply at
each price
(overhead for ex. include in your
notes)
 Law
of Supply = the quantities of goods
supplied will be greater at higher prices
than will be supplied at lower prices.
P  S
↓P ↓ S
 Producers
want to make the most money
possible! It cost the same to produce a
good so want to sell it at that highest
price possible for more profit!
Change
in QS = change in the # of
goods available due to a PRICE
CHANGE.
Reason for a ΔQS:
Change in Price (ΔP)
EX:
McDonald’s increases the price of
a large pop from $1 to $1.89
(graph on overhead)
Price
Elasticity of Supply = how
much is supplied based on a
change in price.
PES = %ΔQS
%ΔP
greater than 1 = elastic
less than 1 = inelastic
equals 1 = unitary
Change in Supply (ΔS)= a change
in the number of units supplied
at every price.
[graph together on overhead]
 Cause for a change in supply=
Number of Factors, such as:
1. Change in Technology
2. Change in the Cost of inputs

EX:
technology changes and there is
a more efficient way to produce
cars. This can increase productivity
and lower the cost, which may allow
GM to sell 650 cars at $20,000
instead of 600.
A change in the cost of inputs may
cause a loss for the firm. If the cost
of labor goes up, or raw materials, or
higher energy costs=all increase cost
of production.