Transcript Changes in Supply

Do Now:
 If you owned a deli, what would be some
reasons for you to have to raise prices of
sandwiches?
Changes in Supply
Aim: What factors can cause a change in
supply?
1) Input
a) Any change in the cost of an input will effect
supply.
b) Input – something that goes into the creation of
a product.( raw materials, labor, machinery)
c) If the cost of inputs rises, the cost of production
will increase, supply will fall.
2) Technology
a) Advances in technology
can lower production
costs.
b) Robots can replace
workers in factories
and lower costs of
production.
c) Manufacturers end up
spending less on
salaries and benefits.
Example: E-mails can
lower prices on
communication.
3) Governments Influence on Supply
a) The government can
effect the supplies of
many goods by raising
or lowering the costs
of production.
b) The can also influence
firms to join an
industry.
United States subsidizes
mining, cattle ranching, tobacco
farming
Lowers marginal cost = supply
increases
c) Subsidies –
government payment
that supports a
business or market.
Why would the government do
this?
a) To protect young growing
industries
Example: After WWII
imported food was
cheaper, but European
governments would
subsidize farms to
prevent food shortages if
imports were cut off.
b) To protect failing
industries (Automobile
Industry)
c) bailout
4) Taxes
a) A government can
reduce the supply of
some goods by placing
an excise tax on them
b) Excise tax – a tax on
the production or sale of
a good.
c) Excise taxes are used to
discourage the sale of
goods that are harmful to
the public
Future Expectations of Prices
Situation
If you were a pumpkin farmer and you
expected prices of pumpkins to double in
the next month, what would you do with
the crop you just harvested?
5) Future Expectation of Prices
a) If a farmer expects the price to
rise in the future, he will store
the goods now to sell more at a
higher price in the future
b) Inflation- a condition of rising
prices.
c) The value of cash in your
pocket decreases from day to
day as prices rise
6) The Number of Suppliers
a) If there are too many suppliers on the market,
prices fall because of competition
b) If there are few suppliers on the market, the
supply will decline and prices can rise
Regulation
1.
Regulation - government
intervention in a market
that effects price, quantity
or quality of a good.
2. The government put
regulations on car
manufacturers to install
technology which would
make cars pollute less.
3. This technology led to an
increased cost of
production
Exit Questions
1. How does a change in the price of an input effect
cost?
2. Why does the government distribute subsidies?
How does this effect supply?
3. How do taxes effect supply?
4. Why would government regulation of automobile
safety effect the supply of automobiles?
 If you could go back in time to 1960 with
$10,000, what do you think you could buy?
Question
 Do subsidies lead to a right or left shift in
the supply curve?