StandardSSEMI2a. Define the Law of Supply and the Law of

Demand.

SupplySupply is the amount of product offered for

sale at all possible pricesLaw of Supply: the principal that suppliers

will normally offer more for sale at high prices and less at lower prices

Pric

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Qu

an

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Su

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lied

Law Of

Supply

Supply ScheduleList of the various quantities of a particular

product supplied at all possible prices in the market.

PriceQuantity Supplied

Supply CurveA graph showing the various quantities

supplied at each and every price that might prevail in the market.

PriceQuantity Supplied

Law

of

Suppl

y

Supply Curve

Quantity SuppliedPrice

StandardSSEMI3a- Identify and illustrate on a graph

factors that cause changes in market supply

Change in Quantity SupplyQuantity Supplied: the amount producers

bring to the market at a given priceChange in quantity supplied: the

change in the amount offered for sale in response to a change in price

A CHANGE IN QUANTITY SUPPLIED DOES NOT MOVE THE CURVE!!!!!!!!!!!!!!!!!!!!!!!!!!

Change In SupplyA situation where suppliers offer different

amounts of products for sale at possible prices in the market

Cost of InputsThis is the price of factors of production

that are used by producersCost of inputs goes up the curve shifts leftCost of inputs goes down the curve shifts

right.

ProductivityThis is how efficient workers are.More efficient the more the supply curve

will move to the right.

TechnologyNew inventions or innovationIt affects the production cost.New technology moves the curve right.

Subsidies and taxes Firms view taxes as costs which causes the

cost of production to increase, moving the curve to the left.

Subsidy: a government payment to an individual, business, or other group to encourage or protect a certain type of economic activity

ExpectationsProducers think if the price of their product

will go up, they may withhold some of the supply.

Gov’t regulationsCreation of new gov’t rules or lawsWhen government establishes new

regulations, the cost of production can be affected, causing a change in supply.

Number of SellersThe change in the number of suppliers

causes the market supply curve to shift to the left or right.

More firms to the right… Less a shift to the left