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Law of Supply. How is Supply similar yet different from Demand?. Think– what would you want to happen if you owned a business?. You are motivated by profit (profit incentive) You want customers to be happy (continue to shop) You want to stay in business as long as possible
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Law of Supply How is Supply similar yet different from Demand?
Think– what would you want to happen if you owned a business? • You are motivated by profit (profit incentive) • You want customers to be happy (continue to shop) • You want to stay in business as long as possible • You want your employees (if large enough to hire) happy • You want to make as much money as possible
As the Price for a good or service goes upSo too does the Quantity Supplied Makes sense doesn’t it?
If you would sell a good or service for $5,Why wouldn’t you want to sell more of the same good or service for $10? $10 ea OR ??? $5ea
Sure it makes sense because the more money I can sell something for, the more profit I will make (assuming the costs stay the same– Ceteris Paribus) • Profit = Price - Cost
On the opposing side, the law of Demand is just the opposite: As the price goes up the quantity demanded goes down Makes sense too? Right?
Sure that makes sense too, a penny saved is a penny earned. Why pay more than is absolutely necessary? • Money not spent is money in my pocket or bank!
How does the Law of supply look on a graph? As the Price goes up the Quantity supplied goes up too
Wow that graph is similar but different from all of the Demand curves we have drawn! • Yes, They’re like mirror opposites. • One goes upper left to • lower right • And the other goes lower • left to upper right. • Which is which?
What can change Supply then???? • I sense a new foldable coming on….. Oh brother • Chapter 5.5 Supply Shifters p 85-87 • More Economic Origami
