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Supply Supply – the amount of good and services that sellers are willing and able to sell all prices The Law of Supply • Law of Supply – the higher the price offered, the larger the quantity produced by the supplier; the lower prices offered, the lower quantity supplied • Producers want to sell more at a higher price Price Supply As Prices Increase Quantity Supplied Increases Price Supply As Prices Fall Quantity Supplied Falls The Supply Schedule and Curve • Supply Schedule - the table of the total amount consumers are willing and able to sell at all prices at a specific point in time. •Supply Curve - A graphic representation of the individual or market supply schedule The Supply Schedule and Curve Price .50 1.00 1.50 2.00 2.50 3.00 Quantity 100 150 200 250 300 350 Price per slice of pizza $3.00 2.50 2.00 1.50 1.00 0.50 0 100 150 200 250 300 350 Quantity Supplied of Slices of Pizza •The Supply Curve is always upward sloping, because as the Price goes up people want to sell more. Price 8 6 6 8 Quantity What Causes Shifts in the Supply Curve? • The supply curve will NEVER shift if it is just due to PRICE. • When price changes, it is only a change along the curve, up and down, and only the quantity supplied will change with the new price. Why does the supply curve shift? TIGERS Determinants of Supply What this means More Tech = Faster, Make More = Supply Increases T Changes in Technology I Changes in the Cost of Inputs G Changes in Government Policy (Government Subsidy) Less Tech = Slower, Make Less = Supply Decreases Costs More to Make = Less Money = Supply Decreases Costs Less to Make = More Money = Supply Increases Subsidy = More Money = Supply Increases E Changes in Producer Expectations of the future R Changes in Government Policy (Regulations & Taxes) S Changes in the Number of Suppliers Expect Price to Drop = Supply Increases Expect Price to Rise = Supply Decreases Taxes = Less Money = Supply Decreases More Producers = Supply Increases Less Producers = Supply Decreases What does a shift in supply look like? Price Quantity Increase Supply What does a shift in supply look like? Price Quantity Decrease Supply Let’s Practice! These are NOT in your packet! Follow along on the Smart board! With Whiteboards! P Oooooooh! Q Record Strawberry Season – Price Highest in Two Decades! How will this information likely affect the supply of strawberry short cakes? • On your whiteboard, Draw your Base Graph • Now, read the Headline AND corresponding question. P • Think about TIGERS • Will it cause an increase or decrease in Supply? • Which shifter? • Show this on your graph by drawing a NEW supply curve… Don’t forget about IRDL! Q _____ in Supply in Cost of Inputs _____________________ Nike Opening 100 Factories Worldwide How will this information likely affect the supply of Nike shoes? Nike Shoes Price ______ in Supply in # of Suppliers ________________________ Quantity Hollister Announces Decrease in Price on all Hoodies How will this information likely affect the supply of Hollister’s hoodies? Hoodies Price Quantity Supplied ______ in Supply in PRICE ________________________ Quantity Government Passes Tax on Cartons of Cigarettes How will this information likely affect the supply of cigarettes? Cigarettes Price ______ in Supply in Government Policy (Excise Tax) ________________________ Quantity Congress Approves Subsidy for Midwest Corn Farmers How will this information likely affect the supply of corn? Corn Price ______ in Supply in Government Policy (Subsidy) ________________________ Quantity Apple Introduces the Gadget Pro 1400 that Speeds up iPad Production How will this information likely affect the supply of Apple iPads? Apple iPads Price ______ in Supply in Technology ________________________ Quantity Analysts Predict American Airlines Flight Tickets to Increase in the Year 2013 How will this information likely affect the supply of airline tickets? Airline Tickets Price ______ in Supply in Producer Expectations ________________________ Quantity SUPPLY HEADLINES #1 Individual In-Class Practice Headline A Record Peach Harvest – Price Lowest in a Decade How will this information likely affect the supply curve for frozen peach pies? Frozen Peach Pies Price ______ in Supply in Cost of Inputs ________________________ Quantity Headline B U.S. Car Company to Close Six Factories How will this information likely affect the supply curve for the company’s minivans? Minivans Price ______ in Supply in # of Suppliers ________________________ Quantity Headline C Shoe Manufacturer Increases Prices on All Styles How will this information likely affect the supply curve for the company’s sneakers? Sneakers Price Quantity Supplied ______ in Supply in PRICE ________________________ Quantity Headline D Gas Prices to Stay Low this Year – Rise Dramatically Next Year How will this information likely affect the supply curve for gasoline? Gasoline Price ______ in Supply in Producer Expectations ________________________ Quantity Headline E Robots Make Automobile Assembly Faster, Cheaper How will this information likely affect the supply curve for cars? Cars Price ______ in Supply in Technology ________________________ Quantity Headline F Congress Passes New “Sugar Tax” How will this information likely affect the supply curve for sugar? Sugar Price ______ in Supply in Government Policy (Excise Tax) ________________________ Quantity Headline G President Approves Subsidy for Solar Energy Industry How will this information likely affect the supply curve for solar energy panels? Solar Energy Panels Price ______ in Supply in Government Policy (Subsidy) ________________________ Quantity Review Supply Homework Questions Headline A Adidas Closing 100 Stores Nationwide How will this information likely affect the supply curve for Adidas Shoes? Addidas Shoes Price ______ in Supply in # of Producers ________________________ Quantity Headline B Gap Announces Increase in Price on all Jean How will this information likely affect the supply curve for the company’s skinny jeans? Gap Skinny Jeans Price Quantity Supplied ______ in Supply in PRICE ________________________ Quantity Headline C Record Apple Season – Price Lowest in Two Decades? How will this information likely affect the supply curve for apple pies? Apple Pies Price ______ in Supply in Cost of Inputs ________________________ Quantity Headline D Jersey Shore’s Snooki is Upset – Congress Passes Tax on Tanning Beds How will this information likely affect the supply curve for tanning beds? Tanning Beds Price ______ in Supply in Government Policy (Excise Tax) ________________________ Quantity Headline E President Obama Approves Subsidy to Help Mama Murray’s Pizza Shop How will this information likely affect the supply curve for pizza from Mama Bench’s? Mama Murray’s Pizza Price ______ in Supply in Government Policy (Subsidy) ________________________ Quantity Headline F T-900 Machine Makes Toothpaste Tubes Faster & Cheaper! How will this information likely affect the supply curve for toothpaste? Toothpaste Price ______ in Supply in Technology ________________________ Quantity Headline G Softball Bat Prices to Decrease Dramatically How will this information likely affect the supply curve for softball bats? Softball Bats Quantity Supplied Price ______ in Supply in PRICE ________________________ Quantity Let’s Review • Law of Supply SUPLY PRICE As prices go up… quantity supplied goes up PRICE As price goes down… SUPPLY quantity supplied goes down. Let’s Review What’s this…? ? ? Price of pizza Quantity Supplied Price of pizza Quantity Supplied .50 5 .50 300 1.00 10 1.00 250 1.50 15 1.50 200 Supply What does a change in Quantity Supplied look like? • Movement along a supply curve shows a change in quantity supplied • For example: • Movement from point A to B • ONLY CAUSED BY PRICE B A Supply What Causes a Shift in Supply? • Change in Technology • Change in Cost of Inputs (FoPs) • Change in Government Policy (Subsidy) • Change in Producer Expectations of the future • Change Government Policy ( • Changes in the Number of Regulations & Taxes) Suppliers What does a shift in supply look like? Original Supply Curve • Shift from S1 to S2 is an increase in supply • Shift from S1 to S3 is a decrease in supply • Less supplied at each price Decrease in Supply S1 S2 Price • More supplied at each price S3 Quantity Increase in Supply What is the most confusing part of supply? Quiz! Whaaaaat? Stations • For each of the following problems, state which curve would shift: the supply curve or the demand curve. • Then state whether the curve would shift to the right (an increase in supply or demand), or shift to the left (a decrease in supply or demand). • (Hint: Beware of two trick questions!) Market Event Would the demand curve or supply curve shift? Would the curve shift to the right or left? CURRENT EVENTS • On your POST IT…. • Write your NAME • ON THE FRONT: • Name ALL Demand and Supply Factors • ON THE BACK • Explain the LAW of DEMAND and LAW OF SUPPLY
