2 Section 1: Understanding Supply Supply is the counterpart to demand, together they shape markets.
3 SupplySupply is the amount of goods or services available.
4 Law of SupplyPriceSupplyPriceSupplySuppliers will offer more of a good at a higher price, and vice versa.
5 Price of a slice of pizza Quantity of slices supplied Supply SchedulePrice of a slice of pizzaQuantity of slices supplied$.501$1.002$1.503$2.004$2.505A supply schedule is a table that lists quantity supply levels at different prices.
6 Market Supply Schedule Price of a slice of pizzaQuantity of slices supplied$.501 million$1.002 million$1.503 million$2.004 million$2.505 millionA market supply schedule charts supply levels for an entire economy.
7 Supply CurveSupply curves plot the data from demand schedules onto a graph.
8 Creating our own supply schedule How much would you sell an ipad for?
9 Elasticity of SupplyElasticity measures the way supply responds to changes in price.Elastic supply = supply changes greatlyInelastic supply = supply doesn’t change much
10 Elastic SupplyAn increase/decrease in price greatly impacts the level of supply.Examples?
11 Inelastic SupplyAn increase/decrease in price doesn’t greatly impact the level of supply.Examples?
12 Section 3: Costs of Production Supply is influenced not only by demand, but by the costs of production.
13 Costs Costs can be divided into two categories… Fixed cost: a cost that does not change, no matter how much is produced.Variable cost: A cost that rises and falls depending on how much is produced.
14 Business Cost Exercise With a partner, quickly create a business idea.Come up with a list of all the different costs you will have in supplying your good/service.
15 Business Cost Exercise With a partner, quickly create a business idea.Come up with a list of all the different costs you will have in supplying your good/service.Determine which are fixed costs and which are variable.
16 Examples of Fixed and Variable Costs Rent/mortgageEquipment purchase/repairProperty taxesSalaries of workersVariable:Extra resources to produce moreExtra employeesAdvertising/MarketingUtilities: heat/electric
17 Total CostFixed costs + variable costs = total cost
18 Managing Variable Costs Businesses need to decide whether creating additional supply is worth the additional costs.
19 Section 3: Changes in Supply Like demand curves, sometimes shifts occur along the curve, and sometimes the entire curve shifts.
20 Supply Shifts Impacts on supply include… Change of price for good/serviceProduction costsTechnologyGovernment influence on supply
21 Supply CurveSupply Curves can shift right or left depending on increased or decreased supply levels at all costs.