Presentation on theme: "Chapter 5 Section 1 What is Supply?"— Presentation transcript:
1 Chapter 5 Section 1 What is Supply? ECONOMICSChapter 5 Section 1 What is Supply?
2 Chapter 5: Supply DEFINITION Supply is the willingness and ability of producers to offer goods and services for sale.
3 Law of Supply:Producers willing to sell more of product at higher than at lower price
4 The Law of Supply Example: Price and Supply Smiths sell tomatoes at farmers’ marketwilling to offer 24 pounds at standard price of $1 per poundwilling to offer 50 pounds at $2 per poundwilling to offer 10 pounds at 50 cents per poundsnot willing to supply any tomatoes below 50 cents
5 Supply Schedules Supply schedule is two-column table Individual Supply ScheduleSupply schedule is two-column tableleft-hand column lists various prices of a good or serviceright-hand column shows quantity supplied at each price
7 Market Supply Schedules Market supply schedule format similar to supply schedulequantities supplied are much largermarket quantity supplied also depends on priceMarket research used to create market supply schedulesome producers want to learn prices, amount offered by all in market
9 Applying Economics Concepts Imagine that you own a health food store that sells several brands of nutrition bars. Create a supply schedule showing how many bars you would be willing to sell each month at prices of $5, $4, $3, $2, $1.
10 Supply Curves Individual Supply Curve Supply curve is graphic representation of law of supplySupply schedule and curve based on following assumption:all economic factors except price remain the same
12 Supply Curves Market Supply Curve Market supply curve differs in scope from individual supply curveboth constructed same waySupply curves for all types of producers follow law of supplywill provide more at higher prices although costs more to produce moreWhy?higher prices signal potential for higher profits
14 Applying Economics Concepts Use the supply schedule for nutrition bars you created earlier to create a supply curve.
15 Critical Thinking Why does a supply curve slope upward? How is the law of supply similar to the law of demand? How is it different?Focus on one item you buy regularly for which the price has changed. How did this change in price influence supply?
16 Critical Thinking4. Create a market supply curve for skis using the market supply schedule below.Price per Pair ($)Quantity Supplied500600425450350325275225200150125100
17 Critical Thinking5. Write a brief explanation of the graph you created in #4 6. Why might producers not always be able to sell their products at the higher prices they prefer? Think about the law of demand and supply and the different attitudes that consumers and producers have towards price. 7. How might the market resolve this difference?