Upload
branden-dawson
View
212
Download
0
Embed Size (px)
Citation preview
1
Essential Question:Essential Question: Identify the two ways that producers can
increase profit, List and briefly describe the 6 non-price determinants of supply, and evaluate whether a tax or a subsidy is more preferable to a producer and explain why
Changes in SupplyChanges in SupplySECTION 2
2
The role of ProfitThe role of Profit Profit is the key motivator behind increase and
decrease in profit. There are two key ways to increase profit
Profit can be increased by generating higher revenues Selling greater quantity of products Selling products for higher prices
Profit can be increased by lowering costs of production
Changes in SupplyChanges in SupplySECTION 2
3
Determinants of supply:Determinants of supply: We will be doing a collaborative group effort for
this segment of the notes In your groups, record the book supplied
definition of your groups assigned D.O.S. Using information from the book, explain
whether your DOS TYPICALLY causes supply to increase, decrease, or both and provide an example of each.
Changes in SupplyChanges in SupplySECTION 2
4
Determinants of supply:Determinants of supply: Resource prices- When the materials required
to produce change in price, it can raise or lower production costs which can effect the profit per unit. If costs decrease, producers make more profit and produce more. If costs increase, producers may make less product as they have to raise prices to make the same amount of profit
Changes in SupplyChanges in SupplySECTION 2
5
Determinants of supply:Determinants of supply:Technology- Developing new technology
can lead to increase production efficiency and lower production costs per item.
Changes in SupplyChanges in SupplySECTION 2
6
Determinants of supply:Determinants of supply:Competition- when more producers
enter/leave the market, an increase/decrease in the available supply of the product can occur.
Changes in SupplyChanges in SupplySECTION 2
7
Determinants of supply:Determinants of supply:Prices of related goods- if producers have
reason to think that there will be a shift in demand for a related good causing an increase/decrease at each and every price, they may increase/decrease supply.
Ex: if the price of hot dogs decreases, ketchup makers will make more ketchup since they expect demand to increase.
Changes in SupplyChanges in SupplySECTION 2
8
Determinants of supply:Determinants of supply:Producer expectations- Sometimes
producers have reasons to believe that their will be higher/lower costs in the future or higher/lower demand in the future and they adjust their supply levels accordingly
Changes in SupplyChanges in SupplySECTION 2
9
Determinants of supply:Determinants of supply:Government Tools- Often the government
can have an impact on producers costs Tax- since this is a cost that producers have to
pay, increases/decreases are closely monitored Subsidy- Either a reduction in tax or an actual
money payment to a business. Regulation- A law that could force a company to
change the way it does business resulting in higher/lower costs.
Changes in SupplyChanges in SupplySECTION 2