Transcript Supply - InforMNs

Supply
(The Business Point of View)
Another Key Economic Concept
The Profit Motive
• The main reason, or motive,
businesses produce goods and
services is to make a profit.
• Profit is the money a business makes
after all its costs have been paid.
• Profits are used in a variety of ways.
What is supply?
• Supply is the quantities of a good or
service that producers are willing to
sell at all possible market prices.
• Supply and demand interact to determine
price and the quantities of
products/services that are bought and
sold.
The Law of Supply
• The Law of Supply states that as
the price of a good rises, the
quantity supplied also rises. If the
price of a good falls, the quantity
supplied also falls.
In other words, price and quantity
supplied move in the SAME direction.
Supply Schedule
• The Law of Supply
can be represented Quantity
Supplied
with numbers, just
100
like the Law of
Demand
90
• This is an example
of a Supply
Schedule
Price per
video game
$50
$40
70
$30
30
$20
10
$10
1
$5
Graph the Supply Curve
• X-axis quantity supplied
• Y-axis price per video game
Y
X
Supply Curve
• A Supply Curve is a graph that shows
the amount of a product that would
be supplied at all possible prices.
The Supply Curve
Software Supply Curve
$60
Price per Video Game
$50
$40
$30
$20
$10
$0
0
50
100
Quantity
150
Supply Curve Shift
• What happens when the supply curve
shifts to the right?
• What happens when the supply curve
shifts to the left?
• Why does it shift?
The Supply Curve
• What is happening
when the supply
curve shifts to the
right?
• The supply has
increased.
The Supply Curve
• What is happening
when the supply
curve shifts to the
left?
• The supply has
decreased.
Factors That Affect Supply
• Price is #1
– How much money can they make? This won’t
cause a shift!
Other factors include: (choose ANY FOUR)
•
•
•
•
•
•
•
•
Cost of Resources
Productivity of Workers
Technology
Government Policies
Taxes
Subsidies – a government payment
Expectations
Number of Suppliers
 What is it?
 How does it increase supply?
 How does it decrease supply?
STOP!!!!!!
 for Understanding
1.
The Law of Supply states that as the price of a good rises,
the quantity supplied _________. If the price of a good
falls, the quantity supplied __________.
2.
What is the #1 factor that affects supply of a product?
3.
What are some other factors that affect the supply of a
product?
4.
_____________ _____________is a measure of how the
quantity supplied changes in response to changes in price.
5. Give an example of a good that is (supply) elastic.
6. Give an example of a good that is (supply) inelastic.
Supply Elasticity
• Supply Elasticity is a measure of how
the quantity supplied changes in
response to changes in price.
Supply Elasticity
• If the quantity supplied changes a lot
in response to price shifts, the
product is supply elastic.
• If the quantity supplied changes very
little, the product is supply inelastic.
Supply Elasticity
• Supply Elasticity depends on how quickly a
company can change the quantity of a
product it makes in response to a price
change.
• Oil- inelastic
• Candy-elastic