A Picture is Worth a Thousand Words: Supply Unit 2 Lesson 9

Why do producers offer goods and services for sale? Producers wish to earn money or even take pride in providing a good or service that other people find valuable enough to buy. The relationship between price and the quantity producers are willing to produce is depicted by a supply schedule. As the price rises, producers are willing, for most goods and services, to produce more.

How Many Hours Are You Willing to Work? You have decided that you need to earn more money. You are considering applying for a part-time job. Describe the abilities you have that you think will influence the wage rate employers will offer you. Knowledge Attitudes Skills

List the number of hours that you are willing to work per week at each of the hourly rates of pay in the column below. Assume a seven-day week, and remember that you must still attend school. Hourly Pay Hours Willing to Work $1.00   $5.00 $7.00 $10.00 $15.00 $20.00 $25.00 $100.00

Hours Willing to Work for 1 Week Hourly Pay Student 1 Student 2 Student 3 Student 4 Total $1.00 $5.00 $7.00 $10.00 $15.00 $20.00 $25.00 $100.00 Total _____________

Graph It! Supply of Hours to Work

Summarization of the Law of Supply As prices for goods or services rise, the quantity people are willing and able to supply rise. As prices for goods and services fall, the quantity people are willing and able to supply decreases.

How do selected determinants of supply shift the supply schedule? With your shoulder partner read “The Amazing Farmer Jones” and complete questions A and B. Why did so many farmers leave farming to go into other careers? Better alternatives, low market value for their crops, prospect of increased competition from foreign producers of food products, high equipment costs, and taxes. When many producers leave a market (as in the case of farming), what is likely to happen to the quantity produced at any given price? That quantity will fall. The falling quantity is pictured by a supply curve that has shifted to the left. The whole price-quantity relationship or supply curve moves on the graph. This shift occurs because one of the determinants of supply (the number of sellers) has changed. When a determinant changes, the whole supply picture changes.

The supply of cars when open-trade agreements bring in new producers. Indicate with a show of hands (raise the right hand to indicate a shift of supply to the right-an increase; raise the left hand to indicate a shift of supply to the left-a decrease) what will happen to supply in the following circumstances: The supply of cars when open-trade agreements bring in new producers. Shift right; increase in producers. The supply of coffee when freezing temperatures hit the major coffee-producing regions of Brazil and Costa Rica. Shift left; natural disaster decreases inputs. The supply of lumber when a new computer-assisted saw reduces the cost of lumber production. Shift right; new technology decreases production costs. The supply of gasoline today if there is an expected shortage and higher prices likely to occur next week. Shift left; sellers want higher future prices, so they will decrease their supply today.

Closure Concepts Objectives Determinants of Supply- Factors other than price that change (shift) the supply schedule, causing producers to supply more or less at every price. Factors include number of firms, production costs, and new technology. Supply- A schedule (or graph) showing how many units of a good or service producers are willing and able to sell at all possible prices during a period of time. Create a visual to explain how price changes affect the quantity producers are willing and able to supply. P S P S Graph an example of a producer supply schedule on a coordinated axis system. P S Q