Download Supply

Supply

The amount of a good or service that producers
are willing and able to offer

2 Criteria must be present
Must be willing to supply
 Must be able to supply
 *suppliers are only willing to supply products that
make them a profit

Law of Supply


The higher the sale price, the larger the quantity
produced
The lower the sale price, the smaller the quantity
produced
Quantity Supplied

The amount a supplier is willing and able to
supply at a certain price

Changes in price impact quantity supplied and
these changes are represented by movement
along the supply curve
Supply Schedule

Shows the direct
relationship
between price and
quantity supplied
for a specific good.
P
1 1
2
33
44
2
Q
Supply Curve
Factors that Impact Supply






Change in Technology
Change in FOP’s/ Cost of Production
Natural Disaster/Catastrophic Event
The number of sellers
Producer Expectations
Government Subsidies
Change in Technology
 Why
can you not find a VCR in the
store?
 or VHS tapes?
 or Walkmans?
Change in FOP’s/Cost of Production
 Wages
- Labor
 Gasoline prices – Capital
 Raw materials - Land
Natural Disaster/Catastrophic Event

What are examples of natural disasters?
 WWII-rations
 9/11
The Number of Sellers

The more sellers, the greater the supply
Producer Expectations



Producers make supply decisions based on
the expectation that prices will rise or fall
If producers expect higher prices in the future,
producers would supply less to the market today
If producers expect prices to fall in the future,
producers will supply more to the market,
hoping to make a profit before prices decrease.
Government Policies

Subsidies


A cash payment aimed at helping a producer
continue to operate
Excise Taxes

Tax on the manufacture or sale of a good