Identify all vocabulary terms Draw figure 131 on page 149 in your notes Supply Review Questions What is the law of supply Price goes up supply goes up What is the law of demand Price goes up demand goes down ID: 1027867
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1. SupplyTake some time and read pages 148-151 in the textbookIdentify all vocabulary termsDraw figure 13.1 on page 149 in your notes
2. Supply
3. Review QuestionsWhat is the law of supply? Price goes up, supply goes upWhat is the law of demand? Price goes up, demand goes downWhat are the determinants of demand? Buyers (#), income, tastes, expectations, related goods
4. SupplyConsider this: you produce eggs and milk at your farm. Would you produce more eggs or milk if: You could get higher prices for eggs (market surged)?Easter is next week? Eggs are found to reduce heart disease? The government offered subsidies (cash back) to increase milk production?You buy a new machine that cleans eggs twice as fast? NY places a large tax on milk productionThe cost of chickens doubles
5. SupplySupply: various quantities of a good or service that producers are willing to sell at all market pricesLaw of Supply: Producers will produce more goods and services when prices are high, less when lowDirect relationship
6. Introduction to SupplyA supply schedule is a table that shows the quantities producers are willing to supply at various pricesPrice per Widget ($)Quantity Supplied of Widget per day$510$48$36$24$12
7. Graphing SupplyJust like demand, Price is always on the vertical axis, Quantity is always on the horizontalThe line that connects the points from a supply schedule are called a supply curve
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9. Changes in SupplyIf the price of Widgets fell to $2, then the Quantity Supplied would fall to 4 Widgets.Change in the quantity supplied due to a price change occurs ALONG the supply curve
10. DeterminantsThe following factors make supply shift in an economy: Resource Costs/Cost of inputsExpectations about future prices Number of firms (includes weather and natural disasters)TechnologySubsidies, taxes, and regulations (government)
11. Final v. Intermediate Final goods: The goods that consumers actually purchase, finished products (ie: cupcakes)Intermediate goods: goods that are needed to make the finished product (ie: Flour for cupcakes)
12. Resource CostsIf the costs of your intermediate goods increase so does the cost of final productExample: cost of cheese went up, so did the price of a double cheeseburger at McDonalds
13. ExpectationsJust like consumers have expectations (Ie; black Friday), so do producersIf prices are expected to increase, producers produce more. If they are expected to decrease, producers may store their inventory for later releaseDoes not necessarily apply to firms that produce perishable products (ie: bananas)
14. Number of FirmsWhen another Taco Bell opens in Binghamton, our supply of Tacos just increased overallIf Sweet Frog went out of business, there would be a decrease in supply of frozen yogurt overallThis determinant applies to the market as a whole, rather than individual production choices (weather and natural disasters)
15. TechnologyTechnology that allows you to increase your product faster and cheaper will result in an increase in supply. The opposite is also true. If your technology fails, you aren’t producing anything
16. Subsidies, Taxes, regulationsSubsidy: The government gives you money to produce something (always leads to increase in supply)Taxes: Government takes your money when you produce something (leads to decrease in supply)Regulations: Varies. If there are lots of regulations there will be decrease in supply. Less regulation, more output.
17. Graphing an increase shift in supplySeveral factors will change the demand for the good (shift the entire demand curve)As an example, suppose that there is an improvement in the technology used to produce widgets.
18. Graphing a decrease in supplySupply can also decrease due to factors other than a change in price.As an example, suppose that a large number of Widget producers go out of business, decreasing the number of suppliers.
19. The government of Pago-Paga adds a subsidy to boomerang production. QuantityPriceSS1
20. The government of Pago-Paga adds a new tax to boomerang production.QuantityPriceSS1
21. Boomerang producers expect an increase in the popularity of boomerangs worldwide.QuantityPriceSS1
22. The price of plastic, a major input in boomerang production, increases. QuantityPriceSS1
23. workers are introduced to coffee and their productivity increases drastically.QuantityPriceSS1
24. Your TurnComplete the worksheet on supply shifts