1. Essential Question: Changes in Supply SECTION 2
Identify the two ways that producers can increase profit, List and briefly describe the 6 non-price determinants of supply, and evaluate whether a tax or a subsidy is more preferable to a producer and explain why

2. The role of Profit Changes in Supply SECTION 2
Profit is the key motivator behind increase and decrease in profit. There are two key ways to increase profit
Profit can be increased by generating higher revenues
Selling greater quantity of products
Selling products for higher prices
Profit can be increased by lowering costs of production

3. Determinants of supply:
SECTION 2
Changes in Supply
Determinants of supply:
Resource prices- When the materials required to produce change in price, it can raise or lower production costs which can effect the profit per unit. If costs decrease, producers make more profit and produce more. If costs increase, producers may make less product as they have to raise prices to make the same amount of profit

4. Determinants of supply:
SECTION 2
Changes in Supply
Determinants of supply:
Technology- Developing new technology can lead to increase production efficiency and lower production costs per item.

5. Determinants of supply:
SECTION 2
Changes in Supply
Determinants of supply:
Competition- when more producers enter/leave the market, an increase/decrease in the available supply of the product can occur.

6. Determinants of supply:
SECTION 2
Changes in Supply
Determinants of supply:
Prices of related goods- if producers have reason to think that there will be a shift in demand for a related good causing an increase/decrease at each and every price, they may increase/decrease supply.

7. Determinants of supply:
SECTION 2
Changes in Supply
Determinants of supply:
Producer expectations- Sometimes producers have reasons to believe that their will be higher/lower costs in the future or higher/lower demand in the future and they adjust their supply levels accordingly

8. Determinants of supply:
SECTION 2
Changes in Supply
Determinants of supply:
Government Tools- Often the government can have an impact on producers costs
Tax- since this is a cost that producers have to pay, increases/decreases are closely monitored
Subsidy- Either a reduction in tax or an actual money payment to a business.
Regulation- A law that could force a company to change the way it does business resulting in higher/lower costs.