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Individual Markets: Demand and Supply Chapter 3. Demand and Supply Supply

Dec 26, 2015

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  • Slide 1
  • Individual Markets: Demand and Supply Chapter 3
  • Slide 2
  • Demand and Supply Supply
  • Slide 3
  • Demand and Supply Supply A schedule, which shows the various amounts of a product, which producers are willing and able to sell, at each possible price, during a specified time period.
  • Slide 4
  • Law of Supply Ceteris Paribus, there is a direct relationship between price and quantity supplied.
  • Slide 5
  • Ceteris Paribus Ceteris Paribus, means Holding everything else constant, so that we can ignore it.
  • Slide 6
  • Law of Supply So if everything else in the universe is ignored: When prices rise, quantity supplied rises. When prices fall, quantity supplied falls.
  • Slide 7
  • Supply vs. Quantity Supplied Supply Shows what producers are willing and able to produce and sell at a variety of prices. Quantity Supplied Shows the amount producers sell at one specific price.
  • Slide 8
  • Supply vs. Quantity supplied In a market, there is a range of prices. For each price, there is a unique and corresponding quantity supplied. Therefore: supply is made up of a whole series of quantities supplied.
  • Slide 9
  • Data for Supply Curve Price of LobsterQuantity Supplied 251000 20800 15600 10400 5200
  • Slide 10
  • Supply Curve A B C D E
  • Slide 11
  • Determinants of Supply Price Input Prices Prices of Related Products Number of Sellers Technology Regulations, taxes, subsidies Weather
  • Slide 12
  • Determinants of Supply Price Law of Supply tells us the relation between prices and quantities supplied.
  • Slide 13
  • Determinants of Supply Input Prices The prices of all of the materials of production, such as wages, raw materials, software and energy, all strongly affect supply.
  • Slide 14
  • Determinants of Supply Input Prices If the price of any input declines, then the costs of production decline and supply increases.
  • Slide 15
  • Determinants of Supply Prices of Related Products This applies to producers who can produce more than one product. For example: Soybeans vs. corn; or different shampoo products
  • Slide 16
  • Determinants of Supply Prices of Related Products As prices shift, producers will change their product line to stay profitable.
  • Slide 17
  • Determinants of Supply Number of sellers Increase the number of sellers, and supply rises. Decrease the number of sellers, and supply falls.
  • Slide 18
  • Determinants of Supply Technology Over time, technology has lowered the costs of production, resulting in lower prices.
  • Slide 19
  • Determinants of Supply Regulations, taxes, and subsidies Federal, state and local government regulations, taxes and subsidies can impact costs.
  • Slide 20
  • Determinants of Supply Regulations, taxes, and subsidies Note: studies have shown that in nearly all cases, a companys decision to move is not affected by local taxes.Note: studies have shown that in nearly all cases, a companys decision to move is not affected by local taxes.
  • Slide 21
  • Determinants of Supply Weather Clearly weather affects the supply of agricultural products. It can also affect transportation as well.
  • Slide 22
  • Determinants of Supply Expectations Peoples expectations about the future can shape supply in the present. (Note that economists are having difficulty proving exactly how).
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