1 / 15

CHAPTER 5— THE SUPPLY CHAPTER

CHAPTER 5— THE SUPPLY CHAPTER. 5.1 “What is supply?”. 2 Curves— Supply & Demand : Which one is which?. Why does supply increase as price increases?. Let’s think about it. If you could tutor a kid after school, would you do it for… $1/hr? $5/hr? $7.50/hr $10/hr? $20/hr?

barid
Download Presentation

CHAPTER 5— THE SUPPLY CHAPTER

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. CHAPTER 5—THE SUPPLY CHAPTER 5.1 “What is supply?”

  2. 2 Curves—Supply & Demand: Which one is which?

  3. Why does supply increase as price increases? • Let’s think about it. • If you could tutor a kid after school, would you do it for… • $1/hr? • $5/hr? • $7.50/hr • $10/hr? • $20/hr? • If yes, is this price high enough where you would be willing to work more than 1 hr/week? How about 5 hours at this price? Or 20 hours? • $30/hr? • $50/hr? • $100/hr? • $250/hr?

  4. Duh The supply of students willing to stay after school for $250/hr is much greater than the supply willing to stay for $1/hr

  5. Does supply apply only to labor? • In other words, as the price increases, would the production of GOODS also increase? • Personal Examples SUPPLY SCHEDULE OR SUPPLY CURVE?

  6. Classwork • Ch. 5.1 Definition • Subsidy • Identify and briefly describe the 7 reasons why changes in supply occur (p. 116-118).

  7. What would cause THIS to happen?

  8. Reasons for Change in Supply? • Cost of Inputs • Productivity • Technology • Taxes and Subsidies • Expectations • Government Regulations • Number of Sellers

  9. Supply Elasticity • If a small increase in price leads to a relatively larger increase in output, supply is ____________. INELASTIC ELASTIC

  10. Difference between demand & supplyelasticity? • Not much • D.E. – quantities are being purchased • S.E.– quantities are brought to market for sale • Don’t forget: Elasticity is simply a measure of the way quantity adjusts to a change in price.

  11. I need a… • Explain why the first is inelastic and the second is elastic.

  12. Tickle Me Economics • Dec. 1996: Tickle Me Elmo was the hottest toy of the season • Regular price--$23.99; Advertised in newspapers for as much as $500 • Did the company want to supply more? • Since manufacturing could not keep up with the demand, there was a temporary ____________ of supply. INELASTICITY

  13. The supply curve for products that can be made quickly without huge amount of capital and skilled labor is ________. • ELASTIC • Kites, candy, etc. • INELASTIC • Planes, shale oil ***Unlike demand, ONLY production considerations determine supply elasticity.*** (Substitutes, ability to delay purchase, etc. are not important for supply elasticity)

  14. Finally (for this section)… • Unit Elastic Supply • KEY WORD: PROPORTIONAL (change)

  15. AND NOW… SOME OF THEN… “THE MICHIGAN ADVANTAGE”

More Related