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Learning Objective:

Explore shifts in the supply curve through the lens of Tesla vs. Edison and economic principles. Learn about determinants of market supply, such as resource costs, technology, and producer expectations.

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Learning Objective:

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  1. Learning Objective: • Today I will be able to determine what shifts the supply curve by providing examples of what shifts the supply curve. • Agenda • Learning Objective • Tesla vs. Edison • Lecture: Ch. 5.2 Shifts of the Supply Curve • Exit Slip • Vocab. Ch. 5 CONTEMPORARY ECONOMICS: LESSON 5.2

  2. American Genius: Tesla vs. Edison • Identify how are Tesla & Edison different from each other? How are they similar? • (besides both trying to invent electricity) • What potential do the suppliers, investors, or inventors see in electricity? • How would you say that the supply curve was affected? • Determine what would have happened if Tesla & Edison never came across each other? CONTEMPORARY ECONOMICS: LESSON 5.2

  3. Title Notes: Ch. 5.2 Shifts of the Supply Curve • Five determinants of market supply(other than the price of the good) • Cost of resources used to make the good • Price of other goods these resources could make • Technology used to make the good • Producer expectations • Number of sellers in the market CONTEMPORARY ECONOMICS: LESSON 5.2

  4. 1. Changes in the Price of Resources • Any change in the costs of resources: • As cost of producing decreases, suppliers are more willing & able to supply • As cost of producing increases, suppliers are less willing & able to supply • Ex. Price on cheese lowers, therefore, BJ’s is more willing/able to make mozzarella sticks. CONTEMPORARY ECONOMICS: LESSON 5.2

  5. 2. Changes in the Prices Other Goods • A change in the price of a good can increase or decrease opportunity cost of making a related good produced from the same productive resources. • Ex. • Mozzarella cheese is the Resource • Price on mozzarella sticks lowers • As the price of pizza stays, opportunity cost of making pizza decreases. • Better off making more pizza now that price on mozzarella sticks lowered. CONTEMPORARY ECONOMICS: LESSON 5.2

  6. 3. Changes in Technology • Discoveries in chemistry, biology, electronics, and many other fields have created new products, improved existing products, and lowered the cost of production. CONTEMPORARY ECONOMICS: LESSON 5.2

  7. 4. Changes in Producer Expectations • Any change that affects producer expectations about profitability can affect market supply. • An expectation of higher prices in the future could either increase or decrease current supply, depending on the good CONTEMPORARY ECONOMICS: LESSON 5.2

  8. 5. Changes in the Number of Sellers in the Market • Government regulations may influence market supply. • Any government action that affects a market’s profitability, such as a change in business taxes, could shift the supply curve. CONTEMPORARY ECONOMICS: LESSON 5.2

  9. S S' $15 12 g h 9 Price per pizza 6 3 0 12 16 20 24 28 Millions of pizzas per week An Increase in the Market Supply for Pizza CONTEMPORARY ECONOMICS: LESSON 5.2

  10. S $15 S'' 12 g i 9 Price per pizza 6 3 0 12 16 20 24 28 Millions of pizzas per week An Decrease in the Market Supply for Pizza CONTEMPORARY ECONOMICS: LESSON 5.2

  11. Checking for Understanding What are the five determinants of supply, and how do changes in each effect the supply of a good? Cost of resources used to make the good – An increase in the cost of resources this will shift the supply curve inward Price of other goods these resources could make – An increase in this will shift the supply curve inward Technology used to make the good – An increase in this will shift the supply curve outward Producer expectations – An increase in this will shift the supply curve outward Number of sellers in the market – An increase in this will shift the supply curve outward CONTEMPORARY ECONOMICS: LESSON 3.3

  12. Movements Along a Supply Curve VS. Shifts of a Supply Curve • A change in price, other things constant, causes a movement along a supply curve from one price-quantity combination to another. • A change in one of the determinantsof supply other than the price causes a shift of a supply curve, changing supply. CONTEMPORARY ECONOMICS: LESSON 5.2

  13. Checking for Understanding Explain the difference between a movement along a supply curve and a shift of a supply curve. A change in price, other things constant, causes a movement along a supply curve from one price-quantity combination to another. A change in one of the determinants of supply other than the price causes a shift of a supply curve, changing supply. CONTEMPORARY ECONOMICS: LESSON 3.3

  14. Exit Slip • Identify an invention from many years ago, or more recent, that has changed the way some people live. Then, explain how one of the determinants has changed the supply curve on that invention. CONTEMPORARY ECONOMICS: LESSON 5.2

  15. High Profits: Caitlin’s Law • What are some necessary changes? • What are some future expectations the owners have regarding their shop? • How might the current situation of the shop change the supply of the shop? CONTEMPORARY ECONOMICS: LESSON 5.2

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