ECONOMICS

332

Lesson 8
21 November
2017

SOURCE : ECONOMICS Principles, Problems, and Policies by McConnel, Brue and Flynn.
Reminder
Unit Exam on 28 November 2017 ( Tuesday )
coverage : Economic Pespective
Production Possibilities Model
Economic System
Demand
Supply
Market Equilibrium

Reviewer : all lesson exams

powerpoint presentations of all
topics discussed in class

3-2
 Lesson Objectives : ATEOTL, ECSBAT

1. Define and illustrate supply

2. List and explain determinants of
supply
3. Describe how supply can change

LO6 3-3
 Supply
Supply
 the willingness and ability of
producers or sellers to produce or
sell a product at a given price.
Quantity Supplied
 The amount of a particular
product that a firm would be
willing and able to offer for sale at
a particular price during a given
time period
LO3 3-4
Supply Schedule
 shows what quantities will be offered at
various prices or what price will be
required to induce various quantities to
be offered.
Supply Curve
 A graph of supply schedule illustrating
how much of a product a firm will sell
at different prices
 Upward sloping curve reflects a
positive or direct relationship between
price and quantity supplied.
3-5
 Supply Schedule and
Supply Curve
P S1
5

Price (per bushel)

4
P Qs
$5 60 3

4 50 2

3 35
1
2 20
0
1 5 Q
10 20 30 40 50 60 70
Quantity supplied (bushels per week)

LO3 3-6
 Law of Supply
Law of supply
• Other things equal, as the price rises,
the quantity supplied rises and as the
price falls, the quantity supplied falls
Explanation
• Price acts as an incentive to
producers

LO3 3-7
Individual and Market Supply

3-8
Change in Quantity Supplied
• A movement along the supply
curve
• A change in quantity supplied
brought about by a change in
price
• Supply curve is derived holding
everything constant (ceteris
paribus) except the price of
the product.
3-9
 Change in Quantity Supplied

A change in price
will cause a
change in quantity
supplied

3-10
Changes in Supply
• A change of supply due to
change in determinants of
supply
• A new relationship between
quantity supplied of a good
and the price of a good.
• A shift of the supply curve

3-11
 Changes in Supply P

$6
S3 S1

5
Decrease
P Qs S2
in supply
4
Price (per bushel)

$5 12,000
3
4 10,000

3 7000 2

2 4000 1 Increase
in supply
1 1000
0
Q
2 4 6 8 10 12 14 16
Quantity supplied (thousands of bushels per week)
LO3 3-12
 A Movement along a Supply Curve
versus a Shift in Supply
P
$6
Change in quantity
supplied S3 S1

S2
Price (per bushel)

1 Change in supply

0
2 4 6 8 10 12 14 16 Q

Quantity supplied (thousands of bushels per week)

LO3 3-13
 Determinants of Supply
Factors that Shift the Supply Curve
• A change in resource prices
• A change in technology
• A change in the number of sellers
• A change in taxes and subsidies
• A change in prices of other goods
• A change in producer expectations

LO3 3-14
 A Change in Prices of
Resources
A increase in
wages

decreases
the supply of
consumer
goods

LO3 3-15
 A Change in Technology
The development
of more effective
wireless technology

increases the supply

of cell phones.

LO3 3-16
 A Change in Number of Sellers

An increase in the
number of fruit and
vegetable sellers;

increases the supply of

fruits and vegetables.

LO3 3-17
 A Change in Taxes

An increase in the excise

tax on cigarettes,

reduces the supply of

cigarettes

LO3 3-18
 A Change in Subsidies
a decline in subsidies to
state universities
reduces the supply of
higher education.

a 50.00 php subsidy per

sack of rice
increase the supply or
production of rice.
LO3 3-19
 A Change in Price of other
Goods
An increase in the price
of cucumbers

decreases the supply of

watermelons.

LO3 3-20
 A Change in Producer
Expectation

An expectation of a
substantial rise in future
log prices,

decreases the supply of

logs today.

LO3 3-21
Ready?

LE time
Keep everything only your pen on the table
3-22