1. Law of Supply and Supply Curve Supply

2. Law of Supply – economic rule stating that price and quantity supplied move in the same direction -As Price goes up -Quantity Supplied goes up

3. Supply = Producers Quantity Supplied Amount of good or service that producers are willing and able to supply at a specific price. Supply Curve Upward-sloping line that represents the relationship between quantities supplied at possible prices Supply Schedule for CD’s Price per CDQuantity Supplied (in Millions) $10 $11 $12 $13 $14 $15 $16 $17 $18 $19 $20 100 200 300 400 500 600 700 800 900 1,000 1,100

4. Changes in Supply The Concept of supply is producer sided. What could factors could effect the Supply curve?

5. Determinants of Supply 1. Price of Inputs  Raw materials, wages for labor, price of materials needed to make a product change. 2. Number of Firms in the Industry  As more companies enter industry…more products are supplied at every price. As less enter industry = less supplied 3. Taxes  Taxes go up = More expensive to produce = Less supplied 4. Technology  Any improvement in technology will increase supply. It reduces the cost of production

6. Diminishing Returns Law of Diminishing Returns As more units of a factor of production (labor) are added to other factors of production (equipment) after some point total output continues to increase but at a diminishing rate