1 / 9

Understanding Supply Determinants in Economics

Learn about factors beyond price that impact supply: resources, government tools, technology, competition, related goods prices, producer expectations. Government tools like taxes, subsidies, regulations shape supply. Technology enhances efficiency. Competition influences supply levels. Related goods prices impact supply. Producer expectations drive supply shifts. Explore a practical Chicken Farm Exercise to grasp concepts.

sundayj
Download Presentation

Understanding Supply Determinants in Economics

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. Changes in Supply 4.2 • Determinants of Supply: Factors other than price that can change or shift the supply curve. • Prices of Resources— • Government Tools • Technology • Competition • Prices of related goods • Producer Expectations

  2. Determinants of Supply • Prices of Resources--=Raw materials, electricity, workers wages, etc. • Any of these can increase or decrease a business’s production costs. • Lower costs=higher profits • Producers can supply more product • Supply curve shifts to the right

  3. Government Tools 4.2 • Taxes, Subsidies, and Regulation • Tax-Required money paid to the government to help fund services. • Taxes add to a business’s production costs • Higher taxes=higher production costs • Higher production costs=lower profits • Subsidies—Payments to privatebusinesses. • Ex. Wheat farmers—Encourages more

  4. Government Tools 4.2 • Regulation—Rules that the government passes about how companies conduct business. • Ex. Pollution, Safety, • Strict rules—cost $ and reduce supply • Loose rules—cost less $ increase supply

  5. Technology 4.2 • Powerful tool that makes production more efficient and less expensive. • Ex. Automobiles— • 1900 made 1 at a time • Assembly line invented • Costs went down—more profitable—more supply

  6. Competition 4.2 • Competition increases supply • Lack of competition decreases supply • Why? • Demand for product grows • Encourages competitors to enter market • Supply curve shifts to the right

  7. Prices of Related Goods 4.2 • The supply for one good is connected to the supply for its related goods. • Ex. Wheat Farming • Price of wheat falls • Price of corn is up • Choose to grow corn instead • Supply of wheat down/Corn supply up

  8. Producer Expectations 4.2 • The expectations suppliers have of future changes in the price of their products can affect how much to supply now of a product. • Ex. Basketballs—Start of school year • Demand low now—but will increase in November • So, company increases supply now to meet expected November demand • Supply curve shifts to the right

  9. The Chicken Farm Exercise • I. Supply: 10 chickens x 5 Eggs/wk. =50/12=4.2Dz • Demand: 10 Dz./Wk. • Demand>Supply; Scarcity/Surplus? Price? Supply? • II. Supply: 30x5=150/12=12.5 Dz. • Demand: 10 Dz./Wk. • Supply>Demand; Scarcity/Surplus? • Price? Supply?

More Related