2. Supply We’ll add in Demand later. We’ll add in Demand later. Excited? Excited? I can tell. I can tell. It’s just like Demand only different. It’s just like Demand only different. Trust me Trust me Still boring though.* Still boring though.* SectionSection 2

3. Section 1 Vocabulary Supply Supply Law of Supply supply schedule supply curve market supply curve quantity supplied change in quantity supplied change in supply subsidy supply elasticity Equilibrium Price floor * Price ceiling* Work like the vocabulary dogs you are!

4. The Law of Supply The Law of Supply tells us that firms will produce and offer for sale more of their product at a high price than at a low price. * Think of how much work you would perform at $50 an hour. * Why can’t you guys be like this?

6. What is Supply? The amount of a product that would be offered for sale at all possible prices in the market. The amount of a product that would be offered for sale at all possible prices in the market. Everyone who offers an economic product for sale is a supplier. * Everyone who offers an economic product for sale is a supplier. * This is just for show

7. Supply Schedule and Supply Curve Just like demand. Just like demand. An individual supply curve illustrates how the quantity that a producer will make varies depending on the price that will prevail in the market. * A market supply curve illustrates the quantities and prices that all producers will offer in the market for any given product or service. *

8. Look! CD’s again! *

9. Unlike Demand…. Supply curves always slope UP and to the right. * Supply curves always slope UP and to the right. * Insert generic supply curve here.

10. Just like Demand Change in quantity supplied is simply movement along the supply curve. Change in quantity supplied is simply movement along the supply curve. A change in quantity supplied is the change in amount offered for sale in response to a change in price. *Producers have the freedom, if prices fall too low, to slow or stop production or leave the market completely. If the price rises, the producer can step up production levels. *

11. And again, just like demand… A Change in Supply is A Change in Supply is when suppliers offer different amounts of products for sale at all possible prices in the market. It’s a shifting of the curve. * It’s a shifting of the curve. *

12. So what can cause a shift? Factors that can cause a change in supply include: cost of inputs (-) productivity levels Technology – usually increases production Number of sellers Taxes (-) or the level of subsidies (+) *Expectations for the future and government regulations. *

13. Quiz Time!

14. Supply Elasticity Who cares? Who cares? This is inane. This is inane. Let’s cut our losses and go straight to the stuff you need to know for the EOCT. * Even Presidents get bored.

15. Supply & Demand The quick, down & dirty version. * The quick, down & dirty version. *

16. Splice ‘em together. Demand = D Demand = D Supply = S Supply = S Equilibrium = 30 videos demanded at $3 a rental. Equilibrium = 30 videos demanded at $3 a rental. Equilibrium means every consumer who wishes to purchase the product at the market price is able to do so, and the supplier is not left with any unwanted inventory. * Equilibrium means every consumer who wishes to purchase the product at the market price is able to do so, and the supplier is not left with any unwanted inventory. *

17. Equilibrium This is good because it allows producers to determine how many to make and what price to charge. This is good because it allows producers to determine how many to make and what price to charge. This allows them to run an efficient operation. This allows them to run an efficient operation. Surplus = producing too many items Surplus = producing too many items Shortage = Not producing enough. * Shortage = Not producing enough. *

18. And after a big shift? Light a match. Notice how the equilibrium also shifts. Notice how the equilibrium also shifts. Notice how the shift in demand caused more to be produced. Notice how the shift in demand caused more to be produced. See how it all ties together? * See how it all ties together? *

19. Supply Shift Notice the new equilibrium. Notice the new equilibrium. Since supplies decreased the price increased. Since supplies decreased the price increased. Production decreases to maintain efficiency. Production decreases to maintain efficiency. It’s that old “Invisible Hand” of Adam Smith kicking in. It’s that old “Invisible Hand” of Adam Smith kicking in. Markets tend to naturally move toward equilibrium. * Markets tend to naturally move toward equilibrium. *

20. Cat: The other white meat.