Answer these in your notebook:1. Why would Tim Horton’s want to offer

more donuts at higher prices?

2. A new assembly line is created at Ford plants. How will this affect the supply of Fords?

Don’t Forget: Test Corrections Today!!Stock Updates Also!

Supply

• The quantities that producers are WILLING and ABLE to OFFER for sale at all possible prices.

Remind me, what is demand?

• Demand: a consumer’s DESIRE, ABILITY, and WILLINGNESS to buy a product

The Chart & The Graph

• _______________: a LISTING of the various quantities of a particular product supplied at all possible prices in the market.

• _______________: a GRAPH showing the various quantities supplied at each and every price that might prevail in the market.

SUPPLY SCHEDULE

SUPPLY CURVE

LAW OF SUPPLY

• The principle that suppliers will normally offer MORE for sale at HIGH prices and LESS at LOWER prices.• A Positive, or direct, relationship.

As one goes up, the other goes up

What is a market demand curve?

• What can you predict is a market supply curve?

• MARKET SUPPLY CURVE: supply curve that shows the quantities offered at various prices by ALL FIRMS that sell the product in any given market

Let’s Get this Table In Notes

Price Krispy Kreme Quantit

y Supplie

d

Dunkin Donut

s Q.S.

Tim Horton’s Q.S.

Donut Mark

et Q.S.

$.50 1 2 0$1.00 2 4 1$2.00 5 8 4$3.00 9 12 7$4.00 12 18 10

Donut Suppliers

Quantity of Donuts

P

R

I

C

E

3 6 9 12 15 18

$.50

$1.00

$2.00

$3.00

$4.00K.K. D.D.T.H.

WHY????

• WHY can Dunkin offer more?

• WHY does Tim Horton’s offer less?

RULES FOR SUPPLY

• As supply increases, the curve shifts:

• As supply decreases, the curve shifts:

RIGHT

LEFT

Changes in Supply

Why does supply change?

• What makes one producer more efficient than another?–Why is Dunkin better than Krispy

Kreme?–Why is Tim Horton’s worse off than

Dunkin?

Have out notebook and highlighter!!

Review notes on supply!!

S

1. COSTS OF INPUTS

• Inputs are the RESOURCES/FACTORS that go into production of a good/service.

• As cost on inputs increase, supply offered will DECREASE.

• As cost of inputs decreases, supply offered will INCREASE.

2. Productivity

– Relates to the efficiency of the LABOR/WORKFORCE in production

– As workers are motivated productivity will INCREASE and therefore supply will INCREASE.

– When workers are lazy, unmotivated or apathetic productivity will DECREASE and therefore supply will DECREASE.

3. TECHNOLOGY

• Different types of TECHNOLOGY can affect the supply of a good/service

• New technology and innovations will INCREASE supply.

• Older technology or broken equipment will DECREASE supply

4. TAXES & SUBSIDIES

• Taxes increase the cost of production and will DECREASE supply

• Subsidies are government payments to producers to help the business and will INCREASE supply

5. CHANGE IN EXPECTATIONS

• Expectations about the FUTURE price of a product can also affect the supply curve.

• If producers think the price of their product will go up in the future they will withhold supply now, thus DECREASING supply.

• If producers expect lower prices in the future, they will INCREASE their supply now

6. GOVERNMENT REGULATIONS

• As government establishes new regulations and laws the cost of production can be affected.

• New regulations mean more costs and therefore will DECREASE supply.

• Relaxing restrictions or removing regulations will INCREASE supply

7. NUMBER OF SELLERS

• The number of sellers in the market for a product will affect the market supply curve.

• As more suppliers enter the market the supply of that product will INCREASE

• As suppliers go out of business the market supply of that product will DECREASE

Let’s look at some scenarios”

• Just like with demand, we can draw economic models of supply to describe answers to supply scenarios.

P

Q

S

Supply will _______________,

due to ___________________;

therefore the curve will shift _______.

Let’s Look at a Scenario:

1. A new assembly line is created at Ford plants. How will this affect the supply of Fords?

The Supply of Cars will _________ due to __________; therefore the curve will shift ___________.

IncreaseTechnology

Right

Let’s Look at a Scenario:

2. The Gov’t raises a duty on all companies that import fruit from other countries. How will this affect the supply of bananas?

The Supply of bananas will _________ due to __________; therefore the curve will shift ___________.

DecreaseTaxes & Subs

Left