chapter 5 the supply chapter 5.1 what is supply?
TRANSCRIPT
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CHAPTER 5—THE SUPPLY
CHAPTER
5.1 “What is supply?”
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2 Curves—Supply & Demand:
Which one is which?
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Why does supply increase as price increases?
Let’s think about it. If you could tutor a kid after school, would you do
it for… $1/hr? $5/hr? $7.50/hr $10/hr? $20/hr?
If yes, is this price high enough where you would be willing to work more than 1 hr/week? How about 5 hours at this price? Or 20 hours?
$30/hr? $50/hr? $100/hr? $250/hr?
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Duh
The supply of students willing to stay after school for $250/hr is much greater than the supply
willing to stay for $1/hr
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Does supply apply only to labor? In other words, as the price increases,
would the production of GOODS also increase?
Personal Examples
SUPPLY SCHEDULE
OR
SUPPLY CURVE?
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Classwork Ch. 5.1 Definition
Subsidy Identify and briefly describe the 7 reasons
why changes in supply occur (p. 116-118).
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What would cause THIS to happen?
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Reasons for Change in Supply? Cost of Inputs Productivity Technology Taxes and Subsidies Expectations Government Regulations Number of Sellers
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Supply Elasticity If a small increase in price leads to a
relatively larger increase in output, supply is ____________.
ELASTIC INELASTIC
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Difference between demand & supply elasticity? Not much D.E. – quantities are being purchased S.E.– quantities are brought to market for sale Don’t forget: Elasticity is simply a measure of
the way quantity adjusts to a change in price.
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I need a… Explain why the first is
inelastic and the second is elastic.
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Tickle Me Economics Dec. 1996: Tickle Me Elmo was the
hottest toy of the season Regular price--$23.99; Advertised in
newspapers for as much as $500 Did the company want to supply more? Since manufacturing could not keep up
with the demand, there was a temporary ____________ of supply.INELASTICITY
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The supply curve for products that can be made quickly without huge amount of
capital and skilled labor is ________.
ELASTIC Kites, candy, etc.
INELASTIC Planes, shale oil
***Unlike demand, ONLY production considerations determine supply elasticity.***
(Substitutes, ability to delay purchase, etc. are not important for supply elasticity)
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Finally (for this section)… Unit Elastic Supply
KEY WORD: PROPORTIONAL (change)
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AND NOW…
SOME OF THEN…
“THE MICHIGAN ADVANTAGE”