Download Supply

Supply
We’ll add in Demand later.
Excited?
I can tell.
It’s just like Demand only different.
Trust me
Still boring though.*
The Law of Supply
The Law of Supply tells us that firms will produce and offer for sale more of their
product at a high price than at a low price.
Think of how much work you would perform at $50 an hour. *
What is Supply?
The amount of a product that would be offered for sale at all possible prices in the
market.
Everyone who offers an economic product for sale is a supplier. *
Supply Schedule and Supply Curve
Just like demand.
An individual supply curve illustrates how the quantity that a producer will make varies
depending on the price that will prevail in the market.
A market supply curve illustrates the quantities and prices that all producers will offer in
the market for any given product or service. *
Look! CD’s again! *
Unlike Demand….
Supply curves always slope UP and to the right. *
Just like Demand
Change in quantity supplied is simply movement along the supply curve.
A change in quantity supplied is the change in amount offered for sale in response to a
change in price.
•Producers have the freedom, if prices fall too low, to slow or stop production or leave
the market completely. If the price rises, the producer can step up production levels. *
And again, just like demand…
A Change in Supply is when suppliers offer different amounts of products for sale at all
possible prices in the market.
It’s a shifting of the curve. *
So what can cause a shift?
•Factors that can cause a change in supply include:
•cost of inputs (-)
• productivity levels
•Technology – usually increases production
•Number of sellers
•Taxes (-) or the level of subsidies (+)
•Expectations for the future and government regulations. *
Quiz Time!
Supply Elasticity
Who cares?
This is inane.
Let’s cut our losses and go straight to the stuff you need to know for the EOCT. *
Supply & Demand
The quick, down & dirty version. *
Splice ‘em together.
Demand = D
Supply = S
Equilibrium = 30 videos demanded at $3 a rental.
Equilibrium means every consumer who wishes to purchase the product at the market
price is able to do so, and the supplier is not left with any unwanted inventory. *
Equilibrium
This is good because it allows producers to determine how many to make and what
price to charge.
This allows them to run an efficient operation.
Surplus = producing too many items
Shortage = Not producing enough. *
Notice how the equilibrium also shifts.
Notice how the shift in demand caused more to
See how it all ties together? *
be produced.
Supply Shift
Notice the new equilibrium.
Since supplies decreased the price increased.
Production decreases to maintain efficiency.
It’s that old “Invisible Hand” of Adam Smith kicking in.
Markets tend to naturally move toward equilibrium. *