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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.

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Presentation on theme: "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."— 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 private businesses. 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. Supply>Demand; Scarcity/Surplus? Price? Supply?

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