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SUPPLY

SUPPLY. http:// www.youtube.com/watch?v=Ti9p4b4Jn3Q. http://www.polleverywhere.com/multiple_choice_polls/LTEwNjEyNDUyNjE. Supply is the desire and ability to produce and sell a product . The law of supply states , a s prices go up, suppliers will produce more. Supply. Supply Curve.

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SUPPLY

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  1. SUPPLY http://www.youtube.com/watch?v=Ti9p4b4Jn3Q http://www.polleverywhere.com/multiple_choice_polls/LTEwNjEyNDUyNjE

  2. Supply is the desire and ability to produce and sell a product. • The law of supply states, as prices go up, suppliers will produce more Supply

  3. Supply Curve Price 30 A 25 B SUPPLY CURVE 20 C 15 D 10 E 5 F 0 10 40 50 20 30 60 Quantity

  4. FIXED COSTS– are expenses that businesses must incur whether they are producing nothing, a little or a lot. Costs of Production INSURANCE LICENSES, FEES RENT

  5. VARIABLE COSTS – are expenses that vary as the level of PRODUCTION changes. Production Costs SEEDS FERTILIZER WATER WORKERS STEEL WORKERS MACHINES TIRES GLASS TEXTILES WORKERS ADVERTISING ICE CREAM CONES WORKERS SPRINKLES

  6. Adding fixed and VARIABLE gives a business their TOTAL COST. Total Cost • TOTAL COST = FC+VC

  7. Exercise: calculating total cost of 60 73 91 107 121 127 134 141 147 155 160

  8. Changes in Supply • Change in Quantity Supplied (MOVER) is an increaseor decreasein the amount SUPPLIEDdue to a change in PRICE. It only moves if it’s a change in the PRICE of that specific product!!!

  9. Change in Quantity Supplied F Price E MOVES ALONG THE CURVE D C B A Quantity

  10. Changes in Supply • Change in Supply (SHIFTER) is when supply changes due to something other than PRICE.

  11. Change in Supply F F Price E E SHIFTS LEFT OR RIGHT D D C C B B A A Quantity

  12. LABOR PRODUCTIVITY INPUT COSTS EXPECTATIONS TECHNOLOGY 6 Factors for Change in Supply GOVT ACTION # of PRODUCERS http://www.youtube.com/watch?feature=endscreen&v=pt0rdKrhN1w&NR=1

  13. Input Costs • Input costs are the price of theresources needed to produce a good or provide a service. • Cheaper costs = more goods supplied • Example • The cost of corn and oil go up resulting in less gas being produced.

  14. Cost of production goes down Cost of production goes up

  15. Technology • Technology is when one applies scientific methods andinnovations to production. • Better tech enables companies to produce more goods. • Examples • Tractors allow farmers to grow more food. • Computers allow more work to be processed than typewriters.

  16. Better technology Technology shutdown

  17. Government Action • Government policies can either help or hurt costs of production. • Excise Tax, Regulations and… • Subsidies: payments that help to cover some costs, encourage companies to produce a certain good. • Examples • Tax on cigarettes, A subsidy for milk, The Clean Air Act

  18. Subsidy for good Increased tax on good

  19. Number of Producers • If a company is successful, other companies will try to copy that success. • With more producers, more goods or serviced are produced. • Examples: • Many car companies exist due to the success of Ford. • Increased competition drove out Pontiac and Saturn.

  20. New company joins industry Company drops out of industry

  21. Producer Expectations • If producers expect the price of their product to rise or fallin the future, that may affect their rate of production. • If expecting higher selling prices, Sony may choose to produce more PS4s now.

  22. Producer expects price of good to rise Producer expects price of good to fall

  23. Labor Productivity • Labor Productivity refers to the amount of goods and services that a person can produce at a given time. • Increased productivity means more goods can be sold.

  24. New training method Loss of workers

  25. Elasticity of Supply • Elasticity of supply is how responsiveproducers are to price changes. • Elastic supply – quantity supplied will change greatly as price changes. • Inelastic supply – quantity supplied will change little as price changes.

  26. Elastic Supply Price When supply is elastic, prices will not change much, but quantity supplied will change. 30 25 SUPPLY CURVE F E D 20 C B A 15 10 5 60 50 0 10 40 20 30 Quantity

  27. Inelastic Supply Price When supply is in elastic, prices will change a lot, but quantity supplied will not change much. 30 A 25 B SUPPLY CURVE 20 C 15 D 10 E 5 F 0 10 40 50 20 30 Quantity

  28. Factor of Supply Elasticity • The only factor of elasticity for supply is the ease of changing production when the price of an item changes. • Bigger companies are inelastic in the short run as it takes time to adjust production.

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