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9-14 Law of Supply

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BIG Ideas Explain how the incentive of greater profit affects supply. Describe the relationships that the supply curve shows.

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Law of Supply Supply the willingness and ability of producers to provide goods and services at different prices

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Law of Supply Price goes up quantity goes up Price goes down Quantity goes down

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Incentive of Greater Profit The higher the price of a good the greater the incentive is for a producer to produce more. Supply will continue to increase until Law of Diminishing Return eventually the cost (in factors of production) of increasing supply will catch up with your profit However if prices increase and demand stays the same profit will continue

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Supply Curve Amount supplied Price 121 282 423 524 605

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Equilibrium Price Equilibrium Price price at which the quantity demanded and quantity supplied are equal

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4 Determinants of Supply 1) Price of Inputs drops dramatically supply curve shifts to the right

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4 Determinants of Supply 2) Technology improvement in supply will increase the supply curve to the right

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4 Determinants of Supply 3)Number of Firms in the Industry When more firms enter the industry, the supply curve shifts outward to the right

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Determinants of Supply 4) Taxes If the govt imposes more taxes on businesses they cant supply as much and the supply curve shifts to the left

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Shortages and Surpluses of Supply Shortages prices will go up Surpluses prices will go down

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Assignment Due Friday (9-16) On page 204: Do the Use terms from the following list to fill in the blanks in the paragraph below section of Identifying Key Terms (1-6) On page 204: Do Recalling Facts and Ideas #s 1, 4, 7, 8, 10, 12, 13