supply worksheet answers
DESCRIPTION
ap macroeconomicsTRANSCRIPT
• Assignment: Review demand and discuss supply (chapter 3 continued) • Homework: Practice #2 due tomorrow
Supply o Schedule or curve showing amounts of a
product that producers are willing and able to make available for sale at each of a series of possible prices during a specified period.
o Law of supply: As P increase, S increases,
as P decreases, S decreases. (direct or positive relationship)
Supply
o Remember to switch your mind set to producers/firms, not consumers anymore.
o To a supplier price = revenue (incentive to sell product)
A Supply Funny
$1 2 3 4 5
P QS CORN
Various Amounts 5 20 35 50 60
SUPPLY SCHEDULE
SUPPLY SCHEDULE
$1 2 3 4 5
P QS CORN
Various Amounts
A Series of Possible Prices
…a specified time period …other things being equal
5 20 35 50 60
5
P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
Plot the Points
P
Q o
$5 4 3 2 1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
Plot the Points
35
P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
Plot the Points
P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
Plot the Points
P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
Plot the Points
S P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
Plot the Points
Connect the Points
S P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
What if Supply
Increases?
GRAPHING SUPPLY
S P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
Price of Corn
Quantity of Corn
$5 4 3 2 1
60 50 35 20 5
P QS CORN
80 70 60 45 30
S’ Increase in
Supply
Increase in Quantity Supplied
GRAPHING SUPPLY
S P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
What if Supply
Decreases?
GRAPHING SUPPLY
S P
Q o
$5
4
3
2
1
10 20 30 40 50 60 70 80
$5 4 3 2 1
60 50 35 20 5
P QS
Price of Corn
Quantity of Corn
CORN
What if Supply
Decreases?
GRAPHING SUPPLY
Supply Curve
• Change in supply vs. change in quantity supplied?
• Change in supply = shift of entire curve • Change in quantity supplied = shifting
from one point to another point on a fixed line.
Determinants of Supply ROTTEN Factors besides price that cause the supply
curve to shift. Resource prices Other goods (prices of) Technology Taxes & subsidies Expectations Numbers
Resource prices/availability:
• If prices of resources used in production increase, supply decrease and vice versa.
• If availability of resources increase, supply will increase.
Price of other goods: Leather company produces wallets, belts,
and shoes. Price of shoes increase, so factory produces more shoes, and less wallets and belts.
Technology:
• Improvements allow firms to make more with less resources, which lowers the cost of supply. (Therefore increasing it)
Taxes & Subsidies:
• Tax: firms see this as a cost • (excise tax on cigarettes, fees on license to
produce). Therefore decreases supply.
Taxes & subsidies:
• Subsidies: Government pays suppliers to encourage or protect certain economic activity.
• (decrease $ to Universities decreases higher education)
Expectations (of future prices):
• If expect price to rise, produce more. If expect price to drop, produce less.
Number of sellers:
• More sellers = more supply • Less sellers = less supply.
