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CHAPTER 5: SUPPLYEssential Question: How do suppliers decide what goods and services to offer?
SECTION 1: UNDERSTANDING SUPPLY Supply is the
_________________________________ How do __________ decide
__________________________to make available and _______________________?
THE LAW OF SUPPLY
DOES THE LAW OF SUPPLY MAKE ANY ASSUMPTIONS?
Yes!!! Remember ceteris paribus? No ______________ in the cost to produce the
good
THE SUPPLY SCHEDULE
Shows the relationship between ______ and ___________ (QS)
Can be graphed to form a __________________ See p. 112-113
ELASTICITY OF SUPPLY
How will firms (businesses) respond to _____________ in the ____________ of a good?
Key factor is ___________________! A lot of suppliers can’t
immediately_____________________________ Already have ___________________________ Elasticity is different in the ______________ vs.
in the ________________________ Consider the example of the orange grower
on p. 114-115
SUPPLY AND QUANTITY SUPPLIED AREN’T THE SAME THING!
Be sure you know and can explain the difference!
One is affected by ______________, one is affected by ___________________________________!
ΔS ≠ ΔQS!!!!!!!!!!
WHAT CAN CHANGE SUPPLY? (NOT PRICE!)
1. Change ____________________
Raw materials Machinery Labor
2. _________________________ Often decreases costs Newer, more efficient
equipment Robots vs. skilled
labor
3. ________________________• What do sellers expect
will happen to prices in the future?
• Some products are seasonal
• Inflation4. ______________________• Are competitors looking
to get in the market or out of the market for the good/service
WHAT CHANGES SUPPLY? ΔS ≠ ΔQS!!!!!!!!!!
WHAT CHANGES SUPPLY? ΔS ≠ ΔQS!!!!!!!!!!
WHERE DO FIRMS PRODUCE?
Depending on what a business is producing, they might need to locate their business close to where the inputs they need are produced Tomatoes & tomato sauce Soda bottlers Auto manufacturers Silicon Valley Fashion District in New York
SILICON VALLEY
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