CHANGES IN SUPPLY Supply Shifts

Input Costs Any change in inputs (labor, raw materials, machinery) can change supply Rise in cost of input= fall in supply at all prices Decrease in cost of inputs=increase of supply at all levels. Marginal revenue(price of good) & marginal cost (price of 1 more unit) affected. Increase in $$ of input will lower production

Change in Supply A decrease in supply will shift a supply curve to the left. An increase in supply will move it to the right Technology (new machinery or robots in factories) can cut costs and boost supply Ex-computers, s All cut costs and increase supply

Government Influence on supply Subsidy-government payment to support a business or market Protect against foreign competition, guard against drop of imports, protest national industires US-farmers are paid to keep prices profitable for them and keep land available for crisis

Government Excise tax- tax on production or sale of item Increases production costs-passed onto consumer-built into cost Cigarettes, alcohol, high pollutant gasoline Consumers do not know tax exists Regulations- laws or policies by government Factory standards, emissions on cars, lables

Global Economy Increase in wages of Indian workers at a plant that imports carpets to US? New technology (robotics) lowers cost to Japanese phone company that imports to US US imports oil from Russia- Russia finds huge new oil fields.

Other influences Speculation-future expectations Firm might hold or release goods based on what may happen with $$$$$$ in future. Inflation-value of good over time? Number of suppliers

Where do firms produce? Cost of transportation a key!!! Inputs & final product Firm that makes tomato sauce. 7 tons of tomatoes = 1 ton of sauce Plant closer to growers. Why? Firms and plants may also choose places close to urban areas for special skills.