Chapter 4: SupplyChapter 4: Supply

AGENDA Mon 2/6 & Tues 2/7AGENDA Mon 2/6 & Tues 2/7•QOD #10: Calvin’s DilemmaQOD #10: Calvin’s Dilemma

•Review HW (pg 76 & pg 84)Review HW (pg 76 & pg 84)

•Beef, Headlines & Elasticity WorksheetsBeef, Headlines & Elasticity Worksheets

•Demand QuizDemand Quiz

•Basics of SupplyBasics of Supply

•Graphing PracticeGraphing Practice

•HW: Looking for S&D Project P1HW: Looking for S&D Project P1• Pg 94 #3-7Pg 94 #3-7

QOD #10: Calvin’s DilemmaQOD #10: Calvin’s Dilemma

A higher price of peanut butter decreases A higher price of peanut butter decreases the amount sold but it does not decrease the amount sold but it does not decrease the demand of peanut butter.the demand of peanut butter.

Explain how this is possible.Explain how this is possible.

Draw a graph to support your explanation.Draw a graph to support your explanation.

Chapter 4: Section 1 - SupplyChapter 4: Section 1 - Supply

supplysupply refers to the willingness and ability refers to the willingness and ability of sellers to produce and offer to sell a of sellers to produce and offer to sell a good or service. good or service. willingness means the desire to produce and willingness means the desire to produce and

sell the goodsell the good ability to produce and sell means the person ability to produce and sell means the person

is capable and of producing and selling the is capable and of producing and selling the goodgood

The Law of SupplyThe Law of Supply

law of supplylaw of supply holds that as the holds that as the priceprice of a good of a good increases, the increases, the quantity suppliedquantity supplied of the good of the good also increasesalso increases the same holds for decreasesthe same holds for decreases

they have a they have a direct relationshipdirect relationship because they because they move in the same directionmove in the same direction both go up togetherboth go up together both go down togetherboth go down together

The Law of SupplyThe Law of Supply

If P the Qs

If P then Qs

The Difference between Supply and The Difference between Supply and Quantity SuppliedQuantity Supplied

Quantity suppliedQuantity supplied refers to the number of units refers to the number of units of a good produced and offered for sale at a of a good produced and offered for sale at a specific pricespecific price ex: hamburger example on page 91ex: hamburger example on page 91

A Supply ScheduleA Supply Schedule

a a supply schedulesupply schedule is a numerical chart that is a numerical chart that illustrates the law of supplyillustrates the law of supply

see Exhibit 4-1 (a) on page 93see Exhibit 4-1 (a) on page 93 QuestionQuestion - What is the relationship - What is the relationship

between price and quantity supplied?between price and quantity supplied?

A Supply CurveA Supply Curve

a a supply curvesupply curve is a graphic representation is a graphic representation illustrating the law of supply illustrating the law of supply it is formed by plotting supply schedule data it is formed by plotting supply schedule data

a a supply curvesupply curve is a line that slopes upward is a line that slopes upward from left to right and shows the amount of from left to right and shows the amount of a good sellers are willing and able to sell a good sellers are willing and able to sell at various prices at various prices

A Vertical Supply CurveA Vertical Supply Curve

When the law of supply does not hold:When the law of supply does not hold: on goods that can no longer be producedon goods that can no longer be produced

exhibit 4.2 (a)exhibit 4.2 (a)

ex: Stradivarius violinsex: Stradivarius violins when there is no time to produce more units of a when there is no time to produce more units of a

goodgoodexhibit 4.2 (b)exhibit 4.2 (b)

ex: sold out theaterex: sold out theater