Download Supply - Flushing Community Schools

SUPPLY and stuff
Intro
 Why firms in a free enterprise economy sell
products?

To make profits.

Its all about the Benjamins BABY
 How might the firms’ incentive for greater
profits affect and be affected by a growing
community?

New stores and restaurants—suppliers—may move into the
area. The new businesses have based their decision on the
increased demand of the growing community
Supply
 Main Ideas
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Supply is the amount of a product offered for sale at all possible
prices in a market.
The Law of Supply states that more product will be offered for sale at
higher prices than at lower prices.
Normal individual supply curves have a positive slope that goes up
from left to right; if price goes up, quantity supplied goes up as well.
The market supply curve is similar to the individual supply curve,
except that it shows the quantities offered by all producers in a given
market.
Change in quantity supplied refers to a change in the quantity of a
product offered for sale in direct response to a change in price.
 Supply Curve:
 A graph that shows the quantities supplied at each and every
possible price
 Supply Schedule:
 a table showing the quantities that would be produced or
offered for sale at each and every possible price in the market
at a given point in time.
 How does the supply curve compare to the
demand curve you read about in the previous
chapter?

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The supply curve slopes in the opposite direction.
Demand
Supply
 Market Supply Curve
 Supply curve that shows quantities offered at various prices by
all firms that sell the same product in the given market.
 Figure 5.2 pg 130
 Answer the critical thinking question.

It would shift to the right because another firm would be adding
additional units of output, in this case burritos, to the ones already
being offered by the first two suppliers.
Quantity Supplied
 Quantity Supplied:
 The amount that a single producer or all producers bring to the
market at any given time.
 Change in Quantity Supplied:
 The change in the amount offered for sale in response to a
change in price.
Quantity Supplied
 What causes a change in quantity supplied?
 a change in the price of the product
 What do you think will cause a change in
supply?

something other than price
Change in Supply
 Change in Supply:
 Different amounts offered for sale at each and every possible
price in the market; Shift in supply curve
Change of Supply
 Main Ideas
 Whereas a change in quantity supplied occurs only when
prices change, a change in supply occurs when quantities
change even though price remains constant.
 Factors that can cause a change in supply include:
cost of resources
 productivity
 technology
 taxes
 subsidies
 government regulations
 number of sellers
 expectations.
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 How does the cost of resources affect supply?
 When the cost of resources decreases, supply increases. When
the cost of resources increases, supply decreases.
 How can management increase productivity?
 by training and motivating workers
Supply Elasticity
 Main Ideas
 Supply elasticity is a measure of the degree to which the
quantity supplied responds to a change in price.
 Like demand, supply can be elastic, inelastic, or unit elastic.
 Production considerations alone determine supply elasticity. If
a firm can adjust to new prices quickly, then supply is likely to
be elastic. If adjustments take much longer, then supply is
likely to be inelastic.
Supply Elasticity
 Supply Elasticity
 Responsiveness of quantity supplied to a change in price.
 What does it mean? Read pg. 135
 Elastic Supply: more than 1
 Inelastic Supply: less than 1
 Unit Elastic Supply: exactly 1
Supply Elasticity
 What determines?
 The time a firm can adjust to new prices:
Quickly:
 Elastic
 Longer:
 Inelastic.
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WRAP-UP
 Create a Venn Diagram of elasticities of supply
and demand?
Answers
 How are the elasticities of supply and
demand similar? How do they differ?

The elasticities of supply and demand are similar in that both
are a change in quantity demanded or supplied proportional
(or not) to price. Unlike demand elasticity, however, supply
elasticity is determined only by production issues. Demand
elasticity is determined by how much income is used, whether
there are substitutes available, and whether the purchase can
be delayed.