Understanding Supply Laws for Business Success

1. Chapter 4 - Supply

2. Law of Supply • As the retail price of a good or service increases, suppliers usually want to supply more. • As the retail price of a good/service decreases, supplies usually want to supply less. • P↑S↑ and P↓S↓

3. Chap. 4 Vocab. Cont. • Supply Schedule – Table showing the quantity of an item to be produced at different prices. • Supply Curve – Graph illustrating the supply schedule • Visuals on pg. 74

4. Shifting Supply Curves • Increase in supply, curve shifts right • Decrease in supply, curve shifts left See visual pg. 80

5. Factors that Shift Supply • Change in Cost of Production • Lower costs, supply increases • Higher costs, supply decreases • Change in price of inputs – Dreyer’s Ice Cream • Improvements in technology • Increase in efficiency

6. Shifting Supply Curves 2. Producer expectations – Candy and flowers before Valentine’s Day

7. Factors that Shift Supply Curve 3. Price of related goods – What items are more profitable 4. Competition – Change in # of sellers 5. Govt. involvement (tools) • Taxes • Subsidies • Regulations