Understanding Law of Supply in Market Economy

1. Warm Up #13 Sometimes the stores are all out of ____. Explain how that makes you feel and why does this happen that the store would be out of _____.

2. Class Focus • We the Senior Class of 2016 will complete ALL of our assignments to best of our abilities and behave appropriately in class. • We will respect all faculty, staff, substitutes, classmates, especially Mr. Wilcox. • We will graduate on time May 20, 2016 and become productive citizens in society.

3. SSEMI2You will be able to explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.B. Define the Law of Supply. Determine and define vocabulary. Identify key terms within the standard. Define each term. ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________

4. Scaffold understanding of the standard(s) and/or element(s).Paraphrase the standard(s) and/or element(s).Rewrite the standard including synonyms or brief definitions in parentheses and in a different color following the key terms found in step 1. You will be able to explain (clarify) how the Law of Demand (want), the Law of Supply (amount), prices, and profits (income) work to determine production and distribution (delivery) in a market (shop) economy.

5. The Law of Supply Nature of Supply SSEMI2

6. Nature of Supply • KEY CONCEPT • Supply is the willingness and ability of producers to offer goods and services for sale. • WHY THE CONCEPT MATTERS • Most people are producers. Doing household chores, working at a job, providing rides to others are ways of producing goods and services. Participating on a team is a way of supplying skills, knowledge, and support to one’s school. Producers incur (earn) costs and receive rewards for the work they do.

7. The Law of Supply • KEY CONCEPTS • Supply—willingnessand ability of producers to offer goods, services • Anyone who provides goods or services is a producer • Law of supply: • producers willing to sell more of producer at higher than at lower price $ ↑, QS ↑ $ ↓, QS ↓Direct Relationship

8. What is the difference between Supply and Quantity Supplied: • Supply—quantityof goods and services that producers are willing and able to offer at various pricesduring a given time period • Quantity Supplied—the amount of a good or service that producers are willing to supplyat each particular price

9. What is Supply? • Ralph Lauren’s • Polo Shirts

10. Nature of Supply Law of supply: • More goods and services are supplied when they can be sold at higher prices, and fewer goods and services are supplied when they must be sold at lower prices. • $ ↑, QS ↑ • $ ↓, QS ↓

11. What causes producers to vary their supply of goods and services? Profit Motive The desire to make money

12. Profit The amount of money remaining after producers have paid all of their costs

13. Costs of Production A business makes a profit when revenues are greater than costs of production. Wages, salaries, rent, loans, etc.

14. What do supply schedules and supply curves illustrate: • Supply schedule • The quantity of a product that a producer is willing to supply at various prices • Supply curve • graphs the data shown in supply schedules • indicates a product’s market over a specific period of time

15. Prices Relationship to Supply • Supply Schedule

16. Nature of Supply Supply ElasticityIndicates the extent to which price changes affect the quantity supplied.

17. Elastic Supply • *Small change in price causes a major change in the quantity supplied: • i.e. Sports teams T-shirts, posters, and hats • Products can be made: • Quickly • Inexpensively, and • Using a few, readily availableresources

18. Inelastic Supply • Exists when a change in a good’s price has little impact on the quantity supplied. • If a producer cannot increase supply regardless of price. i.e. Gold, Land, Space Shuttles • Products require a great deal of: • Time • Money • Resources that are notreadilyavailable

19. Closure Activity #11 • Explain the differences between the terms in each of these pairs: • supply and law of supply • supply schedule and supply curve • market supply schedule and market supply curve

20. Show What You Know! • Georgia Milestone Practice Question • The amount of a good or service that a producer is willing • to sell at various prices • Supply schedule • Law of supply • Supply • Profit

21. Show What You Know! • Georgia Milestone Practice Question • The relationship between the price of a good or service • and the quantity supplied • Inverse • Direct • Profit • All of the above

22. Show What You Know! • Georgia Milestone Practice Question • If a producer of a good cannot produce it fast enough for • consumers to purchase regardless of the price than that • product is said to have • Demand elasticity • Demand inelasticity • Supply elasticity • Supply inelasticity

23. The End • Any questions? • Any questions? • Any Questions? • Any Questions?

24. Warm Up #14 What happens to the supply curve during the Labor Day holiday for sodas? Explain what happens.

25. Do the following assignment in your textbook. • Chapter 5 Section 1 • Do Application Analyzing Effects pgs. 131, 133 & 136. • Analyze Graphs pgs. , 134 & 135 • The NBA Goes International- Connecting Across the Globe p. 136 • Section 1 Assessment p. 137 2-5 • Chapter 5 Section 2 • Analyze Tables p. 139 • Application Drawing Conclusions p. 139, 141, & 143 • Section 2 Assessment 2-5

26. Class Focus • We the Senior Class of 2016 will complete ALL of our assignments to best of our abilities and behave appropriately in class. • We will respect all faculty, staff, substitutes, classmates, and especially Mr. Wilcox. • We will graduate on time May 20, 2016 and become productive citizens in society.

27. SSEMI3cYou will be able to explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.c. Define price elasticity of demand and supply. Determine and define vocabulary. Identify key terms within the standard. Define each term. ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________

28. Scaffold understanding of the standard(s) and/or element(s).Paraphrase the standard(s) and/or element(s).Rewrite the standard including synonyms or brief definitions in parentheses and in a different color following the key terms found in step 1. You will be able to explain (clarify) how the Law of Demand (want), the Law of Supply (amount), prices, and profits (income) work to determine production and distribution (delivery) in a market (shop) economy.

29. Supply Changes in Supply SSEM13

30. Changes in Supply When a product’s supply shifts, different quantities of products are supplied at every possible price. • KEY CONCEPT

31. Acronym for Non- Price Determinants of Supply • Come • Go • To • Papa John’s • Pizza • Right Now.

32. Non-Price Determinants supply shifts: • Competition • Government tools • Technology • Prices of related goods • Producer expectations • Resource prices

33. Competition • A larger number of suppliers in a market tends to increase the supply. • A lack of competition tends to decrease supply.

34. Supply Shifts • Increase in SUPPLY shift RIGHT • Decrease in SUPPLY shift LEFT

35. Government Tools • Tax—Required payment to the government • Subsidy— Payment to private businesses by the government • Regulation- Rules about how companies conduct business.

36. Technology • New technology makes production more efficient and less expensive.

37. Prices of Related Goods • Means that the changes in a product’s price can affect the supply for the product’s related goods. • SUV/Gas • Cereal/ Milk

38. Producer Expectations • The expectations producers have of the future of the price of their products can affect how much of their products they supply to the market now.

39. Resources (prices) • The most common determinant • Includes raw materials • Electricity • Wages

40. What Is Elasticity of Supply? • KEY CONCEPTS • Elasticity of supply—measures producer response to price changes • Elastic—price change leads to larger change in quantity supplied • Inelastic—price change leads to smaller change in quantity supplied • Unit elastic—price and quantity supplied change by same percentage

41. Elasticity of Supply • EXAMPLE: Elastic Supply • As product gains popularity, shortage develops, price increase • Producers can increase supply if: • resources are easy to come by, inexpensive • production uncomplicated, easy to increase

42. Elasticity of Supply • EXAMPLE: Inelastic Supply • Producers may not increase supply if: • availability of resources limited • production capacity cannot be increased • shipping too costly, unavailable or difficult to get

43. Conclusion: What Affects Elasticity of Supply? • KEY CONCEPTS • Main factor determining elasticity is ease of changing production • Given enough time, elasticity rises for most goods and services • Industries that respond quickly to rising or falling prices: • Do not need much capital, skilled labor, hard-to-obtain resources • Other industries need a lot of time to shift resources

44. Show What You Know! • EOCT Question • If an item is difficult to get, this market situation is an • example of • Demand elasticity • Demand inelasticity • Supply elasticity • Supply inelasticity

45. The End • Any questions? • Any questions? • Any Questions? • Any Questions?

46. Warm Up #15 Do Application Analyzing Effects pgs. 131, 133 & 136. Analyze Graphs pgs. , 134 & 135

47. Class Focus • We the Senior Class of 2016 will complete ALL of our assignments to best of our abilities and behave appropriately in class. • We will respect all faculty, staff, substitutes, classmates, and especially Mr. Wilcox. • We will graduate on time May 20, 2016 and become productive citizens in society.

48. SSEF6You will be able to explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.c. Define price elasticity of demand and supply. Determine and define vocabulary. Identify key terms within the standard. Define each term. ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________

49. Scaffold understanding of the standard(s) and/or element(s).Paraphrase the standard(s) and/or element(s).Rewrite the standard including synonyms or brief definitions in parentheses and in a different color following the key terms found in step 1. You will be able to explain (clarify) how the Law of Demand, the Law of Supply, prices, and profits (proceeds) work to determine production (manufacture) and distribution (spreading) in a market economy.c. Define price elasticity (springiness) of demand and supply.

50. Supply Making Production Decisions SSEM12