University High School AP Microeconomics Rewind amp Reverse Very similar to demand amp quantity demanded Supply Supply concerns the behavior of sellers Quantity Supplied the amount that sellers are ID: 655382
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Slide1
Supply Curves
Mr. BarnettUniversity High SchoolAP Microeconomics Slide2
Rewind & Reverse
Very similar to demand & quantity demandedSlide3
Supply
Supply concerns the behavior of sellers
Quantity Supplied:
the amount that sellers are
willing
and
able
to sell
Represented by a single POINT on the supply curveSlide4
Supply
Imagine you set up a lemonade stand in your neighborhood with your sibling If prices go up (people are willing and able to buy at a higher price) how will you react?
You will sell
moahhhhh
!!!!!
Each lemony
lemonada
has become more profitableSlide5
Supply
But, how will you react if prices go down?
You make less lemonade!
Each lemonade is less profitable
If the price drops low enough you might even close the business
At least cut your operating costs…options?
Cheaper resources – expired lemons
Cut labor costs – fire your siblingSlide6
Supply
Thus, our
law of supply
is….
Other things equal
, the quantity supplied of a good rises when the price of the good rises
Positive relationship
Remember, the quantity supplied is just a point on the curve
If there is a change in price we move ALONG the curve to a different quantity supplied point.
The supply (entire curve) does NOT change Slide7
Supply
Is the following statement correct?
If the price for a glass of lemonade increases from $3 to $4, the supply increases from 6 to 7 glasses?
NO!
The quantity supplied has changed but not total supply.
Supply is just a bunch of quantity demanded points strung together
Similarly, demand was just a bunch of quantity demanded points strung together
Price changes quantity supplied
Price does not change supplySlide8
Market Supply
The Lemonade business is going swimmingly
So good,
many other stands set up shop
Has the market
supply for
lemonade changed?
Yes, it has. For any quantity supplied we now have to sum our quantity with our
competitors
.
On a graph we can sum the individual supply curves horizontally to obtain
a market
supply curve