What is the minimum, per hour I would have to pay you to work at Subway? tend there is no minimum wage and you could work for less than $7.5
What is the minimum, per hour I would have to pay you to work at Subway?
Pretend there is no minimum wage and you could work for less than $7.50
Elastic or Inelastic?
Elastic or Inelastic?
Elastic or Inelastic?
Elastic or Inelastic?
Elastic or Inelastic?
Graph subway workers on board
• Jumping jacks market
Law of Supply
• As the price of a good increases, producers will produce more (,or try to) quantity. As the price of the good decreases, producers will produce less quantity.
P Qs and P Qs
The supply curve is always
upward sloping
$
Q
S
For example….• Average prices of • Therefore…..
Graph one:
A Supply Curve
Price ofWidgets
Number of WidgetsSellers Want to
Sell
$1.00 10
$2.00 40
$3.00 70
$4.00 140
Producer Surplus• Difference between cost and sale price• IOW: profit
• Sale: $15• Cost: $10• PS = $5
For example….
In your groups
• Choose either a computer company or a car company
• Your boss wants your group to figure out how to produce MORE of your goods per year
• Consider every factor of production (land, labor, capital)
If price changes Q*supply,What changes supply?
4 Determinants of Supply
• Price of production + or -• Taxes, regulation, raw
materials, labor
4 Determinants of Supply
• Expectations of future price• If future P$ might rise, hold inventory• If future P$ might fall, increase supply
4 Determinants of Supply• Sellers (increase or decrease)
4 Determinants of Supply• Technology
4 Determinants of SupplyMnemonic
• Price of Production
• Expectations
• Sellers (#)
• Technology
•PEST = supply determinants
•TRIBE = demand determinants
PEST Changes Assignment• For each part of PEST, identify one positive
and negative change to the car or computer market and sketch a correctly drawn graph
Diff between supply and DemandXbox games
• Supply or demand change?• Determinant
Diff between supply and DemandWheat
• Supply or demand change?• Determinant
locusts
Diff between supply and DemandNew cars
• Supply or demand change?• Determinant
Diff between supply and DemandUsed clothing
• Supply or demand change?• Determinant
Diff between supply and DemandDog food
• Supply or demand change?• Determinant
Diff between supply and DemandDog food
• Supply or demand change?• Determinant
Diff between supply and DemandSalsa
• Supply or demand change?• Determinant
Diff between supply and DemandSalsa
• Supply or demand change?• Determinant
CLOSED
Diff between supply and Demand Salsa
• Supply or demand change?• Determinant
1 change to Demand (TRIBE)
• Choose 1 market• Xbox360s, pizza, Gatorade, hotel rooms
1 change to Supply (PEST)