Transcript Supply 1
Supply the other side of a market Reference 4.1-4.3 What kinds of goods and services are supplied? Where there is demand, there is supply. SUPPLY THE WILLINGNESS AND ABILITY TO PRODUCE AND SELL A GOOD OR SERVICE. Law of Supply As the price of a good increases, the quantity supplied of that good increases. As the price of a good decreases, the quantity supplied of that good decreases. Does this sound familiar??? Compare the Law of Supply with the Law of Demand Discuss with your partner the similarities and differences of the two laws. • Law of Demand, an inverse relationship between price and quantity demanded. • Law of Supply, a direct relationship between price and quantity supplied Supply Schedules and Supply Curves Apples Price Quantity Supplied $.40 1000 $.60 2000 $.80 3000 $1.00 4000 Typical supply curve: Upward Sloping—a direct relationship An exception to the Law of Supply: A Vertical Supply Curve Goods that can no longer be produced – Stradivarius Violins – Art works – Antiques When there is no time to produce more. – Sold-out concert tickets Consider 2 high schools NothingFancy H.S. – Students don’t get paid for A’s. BigBucks H.S. – Students get paid $50.00 for each A. At which high school would you expect to see more A’s? How does your answer relate to the Law of Demand? Supply Curves Shift Shift to the right – Producers will supply more of the good at all prices Shift to the Left – Producers will supply less of the good at all prices. Supply increase Supply decrease Factors that Can Cause a Supply Curve to Shift Resource Prices Technology Government Action – Taxes – Subsidies – Quotas Number of Sellers Weather Resource Prices Resource Prices rise, producers will supply less Resource Prices fall, producers will supply more Technology Advancement in technology (skills and knowledge relevant to production) – lowers the cost of production – uses other resources more efficiently Government Actions Taxes – Some can increase per-unit costs (left shift) Subsidies – Government payments for certain actions. (right shift) Quotas – government restrictions on production, especially imports (left shift) Number of Sellers. More sellers… shift supply curve to the . . . right Elastic supply = %change Qs > %change P Inelastic Supply = %change Qs < %change price Unit elastic Supply = %change Qs = %change price Classwork: Read and answer the questions, p. 100/101 – “The Beatles” – “Taxes, Tariffs & America’s Great Depression” Complete Section Review, p. 103 #1-4 Homework: – P. 104-105 QToA #1-9 Emergency Homework Read and note Ch 4.2 p. 95-103 Complete Section Review #1-7 – Question #1 is definitions. Instead of rewriting them, you may highlight them in your notes.