Date: October 28, 2015 Topic: Shifts in Supply Aim: Why do shifts in supply occur? Do Now: Multiple Choice Questions.

EXAMPLES OF COSTS: Bills Electric/Gas/Rent Costs of Raw Materials Worker’s Wages/Salaries Any change in the cost of an input used to produce a good will affect supply. #1

Costs If a business’ costs increase, they have less money to put towards making the product so supply will fall. If a business’ costs decrease, they have more money to put towards making the product so supply will increase.

New or better technology is good for business. It lowers costs and makes production cheaper, easier, and faster. (Simplified tasks, cuts costs) This causes an increase in supply. #2

A.) Subsidies:A.) Subsidies: a government payment to support business. Examples: a loan, a grant, etc. #3

If businesses or industries fail it hurts the whole economy.If businesses or industries fail it hurts the whole economy. Examples: the airline industry after 9/11 or the agriculture industry after a hurricane9/11 a)

Use taxes to reduce or limit the supply of certain goods. Excise Tax: tax on the production or sale of a good – sometimes to discourage their use. Products like alcohol and tobacco are heavily taxed, not only on us- the consumers, but on the corporations that produce them. b)

Government intervention in a market that affects the price, quantity, or quality of a good.Government intervention in a market that affects the price, quantity, or quality of a good. 1970’s the Federal government required car manufacturers to install technology to reduce pollution from auto exhaust.1970’s the Federal government required car manufacturers to install technology to reduce pollution from auto exhaust. Rise in the cost of manufacturing = Decrease in the supply c)

Expectations of higher prices will reduce supply now and increase supply later, and expectations of lower prices will have the opposite effect. Seller expects the price of a good to rise in the future - seller stores the goods now in order to sell more in the future. #4

SUMMARY: Why do shifts in supply occur?