1. Warm Up
Consider this scenario: You run a house-painting company. Your company currently owns two ladders.
How many employees should you hire to paint houses?
On what basis do you make this decision?

2. Tuesday, September 25, 2018
Objective: Students will be able to describe the law of supply and the reasons supply changes. Purpose: Supply is one of the factors that determines price. When analyzing supply, you need to view things from the perspective of a businessperson.

3. Law of Supply
Supply: the amount of a good or service that is available
Law of Supply develops from the choices of both current and new producers/businesses
As the price of a good rises, existing firms will produce more in order to earn a higher profit
At the same time, new firms will enter the market to earn a profit for themselves

4. Compare the Law of Supply to the Law of Demand
Compare the Law of Supply to the Law of Demand. How are they the same, and how are they different?

5. The Effect of Price on Production
If a firm is already earning a profit by selling a good or service, then an increase in the price will increase the firm’s profits and encourages the firm to produce more
If a firm is not making a profit by selling a good or service, then a decrease in the price will decrease the firm’s profits and encourages the firm to produce less

6. It makes sense for producers to increase quantity supplied when prices rise. What assumption underlies the decision to increase quantity supplied as price increases?

7. The Effect of Price on Number of Suppliers
Profits appeal both to producers already in the market and to people who may decide to join the market
When the price of a product rises, starting a business that sells that particular product provides a good opportunity to make money
When the price of a product falls, closing a business that sells that particular product is more likely in order to save money

8. This schedule shows how many slices one pizzeria owner will supply at different prices. What would you expect from this pizzeria if prices rose to $7 a slice?

9. Supply Graph Quantity supplied in on the x-axis Price is on the y-axis
Each point on the line shows the price at each specified production level
Slope is always positive
a. How much pizza will the individual pizzeria supply per day at $3 a slice? b. How much pizza will the market supply each day at $4 a slice?

10. All producers need to understand their fixed, variable, and total costs. Which categories of cost would increase for a business that decided to extend its hours of operation?

11. What causes a change in supply?
Any change in the cost of an input used to produce a good (raw materials, machinery, labor, or costs of doing business) will affect supply
A rise in the cost of an input will cause a decrease in supply at all price levels
A fall in the cost of an input will cause an increase in supply at all price levels

12. Changes in input costs can affect the supply of several goods or services. What generalization can you make about the relationship between input costs and supply?

13. Non-price determinants that alter supply shift the entire curve to the right or left. How do supply shifts differ from changes in quantity supplied based on price?

14. Changes in Supply Technology Change in productivity
New machinery can reduce the cost of manufacturing
Change in productivity
New working methods for employees
Structural changes to the workforce

15. Changes in Supply Taxes
A government can reduce the supply of some goods by placing an excise tax (a tax on the production or sale of a good)
This tax increases the production cost of the good
Subsidies (government payments that support a business or market) generally lower costs, allowing a firm to produce more goods
Change in the number of sellers of a type of good

16. In the United States, government subsidizes the building of these commercial aircraft. Why might government subsidize this industry?

18. Closing
Evaluate everything we have learned in the lesson today. What is the most important thing we have learned so far and why?