Microeconomics – Unit 2 Supply Part 3. Law of Supply Quantity supplied rises as price rises, &...
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Microeconomics – Unit 2 Supply Part 3
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Transcript of Microeconomics – Unit 2 Supply Part 3. Law of Supply Quantity supplied rises as price rises, &...
Microeconomics – Unit 2
Supply Part 3
Law of Supply
Quantity supplied rises as price rises, & quantity supplied falls as price falls, other things constant.
P
Q
S
25 50 75 100
$5.00
$9.00
$11.00
$7.00
Supply curve is ________________ sloping.
There is a ________________ relationship between price and quantity supplied.
direct
upward
P
Q
S
25 50 75 100
$5.00
$9.00
$11.00
$7.00
Qs – refers to the specific amount that will supplied at a specific price.
S – refers to a schedule of quantities a seller is willing to sell at various prices, other things constant.
P
Q
S
25 50 75 100
$5.00
$9.00
$11.00
$7.00Qs is just a point on the curve
S is the entire curve
P changes ____________________
P does NOT change _______________
quantity supplied
supply
What accounts for law of supply?
As price rises, individuals & firms __________________________________in order to supply more of that good.
As price of a good rises, the ______________________ of NOT supplying that good rises.
As price of a good rises, the expectation of higher ___________ causes a firm to increase output.
1.
2.profits
opportunity cost
rearrange their activities
Six variables that shift Supply
R
OT
T
E
N
resources -- costs & physical availability
other goods prices – substitutes in production
number of suppliers
expectations of suppliers
taxes & subsidies
technology
New technology helps Bath and Body works turn out double the amount of smelly hand creams.
What happens to P & Q of hand creams?
P
Q
S
D
P
Q
S1
P1
Q1
hand creams
Kinsinger’s Kows noticed that the price of butter has been climbing recently with no end in sight.
What happens to P & Q of cheese?
P
Q
S
D
P
Q
S1
P1
Q1
cheese
Elements of an acceptable IB / AP graph
Q
S
D
P
Q
P1
Q1
High-Definition TV’s
no arrow to show shift of D curve
D1 not labeled
y axis not labeled
What three required elements are missing from the following graph?
Elements of an acceptable IB / AP graph
Q
S
D
P
Q
P1
Q1
no arrow to show P lowers to P1
no dotted lines to new P1 & Q1
market not labeled
What three required elements are missing from the following graph?
P
D1
P
Q
S
D
P
Q
The government subsidizes the cost of construction of roads into National Forests.Show what happens to P & Q for lumber.
lumber
P
Q
S
D
P
Q
Three more T-shirt vendors have opened up shop in Chandler hoping to print T-shirts for the local schools. T-shirtsWhat happens to the P & Q of T-shirts?
P
Q
S
D
P
Q
Prices of calculators continue to fall at a lightening pace.
calculators
the end
What happens to the P & Q of calculators?
