1. Supply
The amount of a good or service that producers are willing and able to offer
2 Criteria must be present
Must be willing to supply
Must be able to supply
*suppliers are only willing to supply products that make them a profit

2. Law of Supply
The higher the sale price, the larger the quantity produced
The lower the sale price, the smaller the quantity produced

3. Quantity Supplied
The amount a supplier is willing and able to supply at a certain price
Changes in price impact quantity supplied and these changes are represented by movement along the supply curve

4. Supply Schedule
Shows the direct relationship between price and quantity supplied for a specific good.
P Q
1 1 2 3
4 4

5. Supply Curve

6. Factors that Impact Supply
Change in Technology
Change in FOP’s/ Cost of Production
Natural Disaster/Catastrophic Event
The number of sellers
Producer Expectations
Government Subsidies

7. Change in Technology Why can you not find a VCR in the store?
or VHS tapes?
or Walkmans?

8. Change in FOP’s/Cost of Production
Wages - Labor
Gasoline prices – Capital
Raw materials - Land

9. Natural Disaster/Catastrophic Event
What are examples of natural disasters?
WWII-rations
9/11

10. The Number of Sellers
The more sellers, the greater the supply

11. Producer Expectations
Producers make supply decisions based on the expectation that prices will rise or fall
If producers expect higher prices in the future, producers would supply less to the market today
If producers expect prices to fall in the future, producers will supply more to the market, hoping to make a profit before prices decrease.

12. Government Policies Subsidies Excise Taxes
A cash payment aimed at helping a producer continue to operate
Excise Taxes
Tax on the manufacture or sale of a good