Economic

5.2 Changes in Supply11:26-14:03

At the turn of the 20th Century, “horseless carriages” were extremely

rare (low in supply). Thanks to a change in capital (technology) the supply rose

dramatically after 1913.

Agenda for Today

• 5.2 Slide Show• Homework– Write a paragraph that reacts to the following

question– Which element of Job Satisfaction do you think is

most important? Explain why.

At the end of today’s lesson, your brain should be “supplied” with the ability to:

• How does the cost of resources affect supply How does competition affect supply

• What effect does worker productivity have on supply?

How does the cost of resources affect supply?• Three Types of Resources– Natural• Material found on earth that

can be used to make a good or service

– Labor• Work done to make a G or S

– Capital• Tools, buildings, machines or

money used to make a good or service

• Any change in cost of resource affects supply

How would a change in technology affect supply?

• Technology– collection of techniques,

methods or processes used in the production of goods or services • Technology tends to

lower cost of production• Example: Henry Ford’s

assembly line• Lowered labor cost

How does competition affect supply?

• Competition among businesses increases supply

• Example: Personal Computers– PC were initially very

expensive and not very powerful

– More businesses began making computers in hope of gaining profit

– Supply of computers increased

Let’s Review• Term for the study of how society chooses what to do with its limited

resources• Economics• Term for basic economic problem that we want more than we can have• Scarcity• Term for what is given up when a different option is chosen• Opportunity Cost• Term for tangible things people create from natural resources• Good• Term for tools people use to make a good or service• Capital• Term for the ability and willingness of a producer to provide things for sale• Supply• Term for ability and willingness of a consumer to purchase a good or service• Demand

What effect does worker productivity have on supply?• Job Satisfaction– Degree to which a worker

likes his job– Greatly affects how much

work is produced (how much is supplied)

– Ex. Ford paid his workers double the normal rate yet he had a high “turnover” rate• Many quit because of – Lack of autonomy–Task significance–Skill variety

How do taxes and subsidies affect supply?• Tax– money paid by people and

business to pay for cost of government• Roads, schools, military, police

– Business views taxes as cost– Higher taxes = higher cost

• Subsidy– Money paid by government to

help certain businesses produce more

• Price supports– Subsidy paid by government to

encourage farmers to produce more

HomeworkWrite a

paragraph that reacts to the

following question

Which element of Job Satisfaction do

you think is most

important? Explain why.