Do Now: Match the example to the correct demand shifter

1.Tastes and Preferences

2.Number of consumers

3.Price of Related Goods

4.Disposable Income

5.Future expectations

A.Alexa got a raise

B.A new study shows that butter is good for your health

C.TVs are going on sale next weekend

D.Sprite is on sale instead of 7-up

E.There is a baby boom in 2019

Supply Note Questions

What is the relationship between the price of an item and quantity supplied?

What causes supply to shift?

What is the relationship between the price of an item and quantity supplied?

Price

As price

increases…

Supply

Quantity

supplied

increases

Price

As price

falls…

Supply

Quantity

supplied

falls

Supply• Supply = the amount of goods available

• Supply is controlled by producers.

• Law of Supply• Suppliers (producers) will offer more of a good at a higher

price. • Direct relationship between quantity and price

Supply Curve

Pri

ce

(in

do

lla

rs)

Output (slices per day)

3.00

2.50

2.00

1.50

1.00

.50

0

0 500 1000 1500 2000 2500 3000 3500

Supply

Supply Curves

• Graphical representation about the relationship between the price and quantity supplied by a producer

Drawing a Supply Curve

• Things you must draw and label• The graph

• Label axes – price & quantity

• The supply curve should be labeled as (S1)

Supply Practice

1. Quantity Supplied when price is $3

2. Quantity Supplied when price is $7

3. Change in Quantity Supplied when price rises from $3 to $5

This movement along the curve is called a change is quantity supplies

What causes supply to shift?

Supply Shifters – non price related shifts in supply

1. Price and availability of resources

2. Technology and efficiency of production

3. Government incentives and influence

4. Expectations of future profits

5. Number of suppliers

6. Global Economy

Price and availability of resources

• Any change in the cost of the factors of production (land, labor, capital) used to produce a good, will affect supply.• As the costs of the factors of

production increase, the firm’s costs also increase decreasing profitability and supply• Example – price of beans goes up

now your beanbag factory has to pay more to make the bags what will happen to your supply of beanbags?

Technology and efficiency of production

• Cost to produce a good can also decrease

• New technology can greatly decrease costs and increase supply.

Government Incentives & Influences

• By raising or lowering the cost of producing goods, the government can encourage or discourage an entrepreneur or industry.

• Subsidy – gov’t payment that supports a business or market. • Supply increases

• Excise tax – a tax on the production or sale of a good.• Reduces supply

• Regulation occurs when the gov’t steps into a market to affect the price, quantity, or quality of a good. • Regulation usually raises costs reduces supply

Other Supply Shifters• Global Economy

• Supply of imported goods and services has an impact on the supply of the same goods and services here.

• Another government’s import restrictions will cause a decrease in the supply of restricted goods.

• Future Expectations of Prices

• Expectations of higher prices will reduce supply now and increase supply later.

• Expectations of lower prices will have the opposite effect.

• Number of Suppliers

• If more firms enter a market, the supply of the good will rise.

• If firms leave the market, supply will decrease.

Graphing Supply Shift

• When supply goes up supply curve moves to the right

• When supply goes down supply curve moves to the left

Hamburger SupplyWhat happens to supply? Which direction does the curve shift?

What is the shifter?

• Mad cow disease kills 20% of cows • Decrease, left, price and availability of resources

• Producers expect prices of hamburgers to increase next month • Decrease, left, future expectations

• Minimum wage increases to $20/hour• Decrease, left, price and availability of resources

• Number of hamburger producers doubles• Increase, right, number of suppliers

• Burger making technology cuts production time in half • Increase, right , tech & efficiency

• New law about beef packaging increases the cost of production • Decrease, right, gov’t infleucne

• All imported beef is contaminated, what does this do to American made hamburgers?

• Increase, right, global economy