Supply

1. Supply

2. Supply • Supply is the amount of goods available. • Law of Supply-The higher the price, the larger the quantity supplied • Reasons for the Law of Supply: • Producers will supply more of something when they realize they can make more money from it • If you are supplying your labor to a company, will you supply more of it if they pay you more?

3. Supply Curve

4. Determinants of Supply • What shifts the Supply Curve? • NICEJAG • Natural/Manmade phenomenon • Input Costs • Competition • Expected Prices • Joint Supply(Goods in joint supply) • Alternate Goods • Government Action • INCREASE in Supply=Shift to the RIGHT • DECREASE in Supply=Shift to the LEFT

5. Natural/Manmade Phenomenon • Hurricane, war, oil spill, etc.

6. Input Costs • If it costs more to make something, Producers will supply less of it. • If it costs less to make something, Producers may supply more of it. • If the price of leather goes up, the supply of leather couches will decrease. • Other examples??

7. Competition • The more competition, the more supply. • As more firms enter the market and increase the competition, obviously the supply will increase.

8. Expected Prices • If the price of something is expected to go up, you will supply less of it now so you can supply more in the future and vice versa. • Inflation can cause producers to supply less now because goods hold their value better than dollars. • This happened during the Civil War in the South.

9. Joint Supply • Goods in Joint Supply • Cow provides beef and leather. • If the price of beef goes up, the quantity supplied of beef will rise. Therefore the supply of leather will increase or shift to the right.

10. Alternate Goods • If a producer uses leather to make belts and couches, an increase in the price of leather couches may decrease the supply of belts.

11. Government Action • Any tax is treated as an input cost • A subsidy for a certain industry may lead to an increase(or decrease) in supply.