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We will be using Cornell Note Taking
Format Today!
Smile and “Own the Day!
Take one step at a time to
Success in Economics class!
Unit Two: Learning Objectives:
North Clackamas School District
Social Studies Priority Standards:
• HS.51 (A): Explain how supply and
demand represents economic activity
and describe the factors that cause them
to shift.
Lesson Four: Daily Learning Target
I Can define and explain in writing the
following key Economic concepts:
 Law of Supply
 Supply Curve
 Elastic and Inelastic
Supply
For Problems 6-15 answer: INCREASE OR DECREASE
6. An increase in income results in a(an) _____________
in demand for steak.
increase
7. An increase in income results in a(an) _____________in
demand for spam.
decrease
8. A decrease in the number of buyers or consumers in the market will
___________
decrease demand for all goods.
9. A decrease in the price of a complementary good results in a(an)
_____________
in demand for another complementary good.
increase
10. An increase in the price of substitute good results in a(an)___________
increase
in demand for another substitute good.
11. An increase in taste for an item results in a(an) ___________
increase in demand.
12. A decrease in the price of a complementary good results in a(an)
__________in
increase demand for the other complementary good.
13. An expectation that the price of a commodity will be higher in the future
than it is now will ____________
increase its current demand.
14. An increase in the number of buyers or consumers in the market will
increase “D” for inferior goods.
increase “D” for normal goods and ________
_________
increase in “D”.
15. If the price of iPad is expected to rise, there will be a(an) _________
Microsoft’s new tablet,
The Surface
$45
Law of Supply
I want a
clean diaper
Your mom
wanted peace
and quiet.
Butter
Bread
Look carefully at this graph.
How does price influence supply?
Why do suppliers love high prices?
Law of Supply
The Law of Supply is the tendency of
suppliers to offer more of a good at
higher prices.
Sellers love high prices.
The Law of Supply is the opposite of
the Law of Demand.
Let’s Make More!!
S
P1
QS1
Take it. We are losing money.
S
P1
QS1
Deriving Market Supply from Individual Firm Supply Curves
S
$3
$3
$2
$2
10,000 30,000
QS1
QS2
S
S
$2
5,000 10,000
QS1 QS2
S
$2
25,000
QS1
Soybeans [bushels]
.
S
Why is the Law of
Supply True?
Supply increases as price rises because
either existing firms will produce more
to make greater profits…
Or new firms will enter the market to
take advantage of the high prices.
Sellers love to make profits.
It’s hard to find vinyl records anymore.
Suppliers prefer selling Compact Discs.
Suppliers go where the higher prices are
Suppliers don’t sell Disco anymore.
There just isn’t any money in it.
A Supply Curve
A supply curve is a graphic
representation showing the tendency of
suppliers to supply more at higher
prices.
A supply curve will always rise left to
right.
Suppliers supply more at higher prices.
S
P
P1
Existing suppliers of DVD
rentals are willing to supply
more as the price increases
& others [Albertson’s] are
attracted to the market.
50,000
Notice how the supply curve rises
left to right.
Supply moves in the direction of price.
Supply Schedule &
Curves
A Supply Schedule displays the quantity of a
product supplied at each price
Price
Bottles Supplied
2.00
1.75
1.50
1.25
1.00
.75
.50
11.6
11.5
11.2
10.7
10
9.1
8
SUPPLY SCHEDULE
CORN
P QS
$1 5
2 20
3 35
4 50
5 60
SUPPLY CURVE
S
P
$5
$4
$3
$2
$1
5
20
35
50
60
QS
Supply Schedule &
Curves
Use the following supply schedule for corn to
create a supply curve.
Price Per Ton
Quantity Supplied
$100
$150
$200
$250
$300
$350
$400
50
75
100
125
150
175
200
I’m saving money
at the lower price.
I normally eat one, but
at this low price, I’m
Having two.
Shot
Glass
“Take Dat
Wit Chew”
Supplied
0 1000 2000 3000 4000 5000
SUPPLY PRACTICE:
 WHEN YOU ARE FINISHED….Skim through Chapter
5 (page 109-115)Answer questions 3-8 on a piece of
notebook paper and turn directly into me today.
THIS CAN BE DONE IN PARTNERS!
 Pick up a graphing worksheet from me. Work on this
independently. Turn directly into me. I want to
personally check your level of understanding on
these concepts.