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SUPPLY

SUPPLY. Macroeconomics – Unit 1. Law of Supply. Quantity supplied rises as price rises, & quantity supplied falls as price falls, other things constant. P. S. $11.00. $9.00. $7.00. $5.00. Q. 25. 50. 75. 100. upward. Supply curve is ________________ sloping. direct.

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SUPPLY

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  1. SUPPLY Macroeconomics – Unit 1

  2. Law of Supply Quantity supplied rises as price rises, & quantity supplied falls as price falls, other things constant.

  3. P S $11.00 $9.00 $7.00 $5.00 Q 25 50 75 100 upward Supply curve is ________________ sloping. direct There is a ________________ relationship between price and quantity supplied.

  4. P S $11.00 Qs – refers to the specific amount that will supplied at a specific price. $9.00 $7.00 $5.00 Q 25 50 75 100 S – refers to a schedule of quantities a seller is willing to sell at various prices, other things constant.

  5.  P changes ____________________ quantity supplied supply  P does NOT change _______________ S is the entire curve P S $11.00 $9.00 $7.00 Qs is just a point on the curve $5.00 Q 25 50 75 100

  6. What accounts for law of supply? 1. As price rises, individuals & firms __________________________________in order to supply more of that good. rearrange their activities As price of a good rises, the ______________________ of NOT supplying that good rises. opportunity cost 2. As price of a good rises, the expectation of higher ___________ causes a firm to increase output. profits

  7. Six variables that shift Supply resources -- costs & physical availability R other goods prices – substitutes in production O T technology T taxes & subsidies E expectations of suppliers N number of suppliers

  8. New technology helps Bath and Body works turn out double the amount of smelly hand creams. What happens to P & Q of hand creams? P hand creams S S1 P P1 D Q Q1 Q

  9. Remember we care about supply & demand b/c of where they ____________ . intersect P hand creams S Their intersection is called ______________ and it tells us the market-clearing __________ & __________ at which all products will be bought & sold. S1 equilibrium P price quantity P1 D Q Q1 Q So from this graph when S shifted P ____& Q____  

  10. Prices of calculators continue to fall at a lightening pace. What happens to the P & Q of calculators? calculators P S P D the end Q Q

  11. The government subsidizes the cost of construction of roads into National Forests. Show what happens to P & Q for lumber. lumber P S P D Q Q

  12. Kinsinger’s Kows noticed that the price of butter has been climbing recently with no end in sight. S1 P cheese S What happens to P & Q of cheese? P1 P D Q1 Q Q

  13. Three more T-shirt vendors have opened up shop in Chandler hoping to print T-shirts for the local schools. T-shirts What happens to the P & Q of T-shirts? P S P D Q Q

  14. Elements of an acceptable IB / AP graph What three required elements are missing from the following graph? y axis not labeled High-Definition TV’s S no arrow to show shift of D curve P P1 D D1 not labeled Q1 Q Q

  15. Elements of an acceptable IB / AP graph What three required elements are missing from the following graph? market not labeled P S no arrow to show P lowers to P1 P P1 D no dotted lines to new P1 & Q1 D1 Q1 Q Q

  16. classwork activity AP workbook p. 25 & 26 10 min

  17. “I can’t teach everyone.” Steven Reff AP Instructor Economics Educator Pueblo High School Tucson, AZ

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