KOHLS CHAPTER 8: FIRM SUPPLY

1
PRICE ANALYSIS
KOHLS UHL CHAPTER 8 PART I SUPPLY CONCEPTS
2
REVIEW
KOHLS UHL CHAPTER 7 INTERNATIONAL FOOD
MARKETING
A. Foreign Trade Is Important For U.S. Farmers
B. There Are Many Reasons To Trade
C. The Law Of Comparative Advantage Says That You
Should Produce What You Are Economically Best At
Trade For The Rest Of Your Needs
D. Various Trade Policies Will Either Inhibit Or
Expand Trade.
E. U.S Has Tried To Expand Ag Exports
3
AG MARKETING CONCEPTS

• Wk 1 Kohls Chap 1 Intro To Food Mkting
• Wk 2 Kohls Chap 2 Analyzing Food Mkts
• Kohls Chap 3 Ag Prod Mkting
• Wk 3 Kohls Chap 4 Food Consumption
• Kohls Chap 5 Food Processing
• Wk 4 Kohls Chap 6 Food Marketing
• Kohls Chap 7 International Mkting
• WK 5 KOHLS CHAP 8 PRICE ANALYSIS
• Kohls Chap 9 Mkt Competition
• Friday Midterm

4
Kohls Uhl Chapter 8 Price Analysis
Learning Objectives After This Lesson, The
Student Should Be Able To

• 1. Discuss The Charactieristcs Of Supply
• 2. Distinguish Between A Change In Supply A
  Change In Quantity Supplied, Their Causes And
  Consequences
• 3. Discuss The Characteristics Of Demand
• 4. Distinguish Between A Change In Demand And A
  Change In Quantity Demanded.
• 5. Discuss The Consequences Of Holding The Price
  Above Or Below Equilbrium

5
Discussion Points
Kohls Uhl Chapter 8 Price Analysis

• Part 1 Supply
• A. Chg In Quantity Supplied
• B. Change In Supply
• Part 2 Demand
• A. Change In Quantity Demanded
• B. Change In Demand
• Part 3 Supply Demand Interaction

6
Market
DISCUSS THE CHARACTIERISTCS OF SUPPLY
Learning Objective
8-1
PART 1 SUPPLY
Firm 1
Firm 3
Firm 2
P
P
P
P
IS
MS
IS
IS
2.50
1.50
Q
Q
10
20
30
15
40
Q
60
90
145
Q
7
I.  FIRM'S SUPPLY CURVE
DISCUSS THE CHARACTIERISTCS OF SUPPLY
Learning Objective
8-1

• A. In the short run, the firm's supply curve is
  the ____________cost curve above the average
  ____________cost curve
• B. The quantity each firm produces is determined
  by where marginal ________ curve equals (crosses)
  marginal ___________ line
• C. If prices _________, the firm will produce
  ________   

MARGINAL
VARIABLE
COST
REVENUE
INCREASE
MORE
8
Learning Objective
DISCUSS THE CHARACTIERISTCS OF SUPPLY
8-1
LOWER

• D. Firms with __________efficiency have
  _______costs.
• E. In the short run, firms will produce as long
  as the                         cost  is above the
  average _____ cost
• F. In the long run, firms will produce as long as
  the                         cost  is above the
  average _____ cost
• G.  Marginal ____________is the same as the
  _________  ___________

HIGHER
MARGINAL
VARIABLE
MARGINAL
TOTAL
REVENUE
SELLING PRICE
9
A. MARKET SUPPLY CURVE
Learning Objective
DISCUSS THE CHARACTIERISTCS OF SUPPLY
8-1
MARKET

• 1. The ___________supply curve is the aggregation
  of the individual firm's _________curve at
  various levels of prices.
• 2. The relationship between price   quantity
  is _______ that means that as prices
  _____________, the quantity __________ will
  increase
• 3. The slope of the firm's and market supply
  curve is __________
• 4. The quantity supplied is graphed on the
  _______________axis and the ___________ is
  graphed on the vertical axis.

SUPPLY
DIRECT
INCREASE
SUPPLIED
POSITIVE
HORZITONAL
PRICE
10
B. Change In Quantity Supplied
Distinguish Between Change In Supply A Change
In Quantity Supplied, Their Causes Consequences
Learning Objective
8-2
Along
1. Concept Movement ___________A Supply Curve

• 2. Chart

Price
Ms
B
A
Quantity
11
3. Conditions
Distinguish Between Change In Supply A Change
In Quantity Supplied, Their Causes Consequences
Learning Objective
8-2
Postive

• A. Slope
• B. Relationship
• C. Horizontal Axis
• D. Vertical Axis

Direct
Quantity
Price
12
D.  Cases 
Distinguish Between Change In Supply A Change
In Quantity Supplied, Their Causes Consequences
Learning Objective
8-2
Down
Up
2. Move _______ A Supply Curve

• 1. Move _______ A Supply Curve    

Price
Price
Ms
Ms
B
A
A
B
Quantity
Quantity
13
E.  Cause
Distinguish Between Change In Supply A Change
In Quantity Supplied, Their Causes Consequences
Learning Objective
8-2

• Change
• In
• Price   

Product
14
F. Consequence
Distinguish Between Change In Supply A Change
In Quantity Supplied, Their Causes Consequences
Learning Objective
8-2
More
B. ____ Supplied At A ______Price

• A. ______ Supplied
• At A ________ Price

Less
Higher
Lower
Price
Price
Ms
Ms
P1
A
P2
B
P2
P1
B
A
Quant
Quant
Q1
Q1
Q2
Q2
15
C. Change In Supply
Distinguish Between Change In Supply A Change
In Quantity Supplied, Their Causes Consequences
Learning Objective
8-2
Shift

• 1. Concept __________Of The Supply Curve

2. Chart
Price
Ms1
Ms2
Quantity
16
 A. SHIFT __________________ B. Shift
__________________
Distinguish Between Change In Supply A Change
In Quantity Supplied, Their Causes Consequences
Learning Objective
8-2
3. Cases 
Left
Right
    4. Cause (Of Shift To Right)
Increase

• A. ____________ In ______________
• B  ___________  In _______  Prices

Technology
Decrease
Input
17
5. CONSEQUENCE (Of Shift To Right)
Distinguish Between Change In Supply A Change
In Quantity Supplied, Their Causes Consequences
Learning Objective
8-2

• A.  ______  Supplied At _______ Price

More
B. Pay ______For _______Quantity
Less
Same
Same
P
P
Ms1
Ms1
Ms2
Ms2
P1
P
P2
Q
Q
Q1
Q2
Q
18
PRICE ANALYSIS KOHLS UHL CHAPTER 8 PART
II DEMAND CONCEPTS
19
A. DEMAND SCHEDULE
Learning Objective
DISCUSS THE CHARACTERISTICS OF DEMAND
3
CONSUMER A
CONSUMER B
PRICE
MARKET
200
500
0.50
700
1100
400
0.25
700
20
B. Demand Curves
Learning Objective
DISCUSS THE CHARACTERISTICS OF DEMAND
3
CONS A
CONS B
MARKET
PRICE
PRICE
PRICE
.50
.25
ID
ID
MD
500
200
700
400
700
1100
QUANTITY
QUANTITY
QUANTITY
The Lower The Price The More Consumers Buy
21
C. Definition Of Demand
Learning Objective
Discuss The Characteristics Of Demand
3

• Demand Is The Amount Of A Good

Or Service That Consumers Are Willing
And Able To Buy In A Given Time Period
Within A Relevant Range Of Prices
22
D. Demand Concepts
Learning Objective
Discuss The Characteristics Of Demand
3
Negative

• 1. Slope
• 2. Relationship
• 3. Shape
• 4. Effects
• A.
• B.
• 5. Underlying Principle

Inverse
Linear
Substitution
Income
Law Of Diminishing Marginal Utility
The More We Buy Of An Item, The Less Satisfaction
We Get From Each Additional Purchase
23
F. Change In Quantity Demanded
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4
Along
1. Concept Movement ___________A Single Demand
Curve

• 2. Chart

Price
A
B
Md
Quantity
24
3.  Cases 
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4
Up

• A. Move _____ A Demand Curve 

Down
B. Move ______ A Demand Curve
Price
Price
A
B
B
A
Md
Md
Quant
Quant
25
4.  Cause
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4

• Change
• In
• Price   

Product
26
5. Consequence
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4
Less
B. ____ Demanded At A ______Price

• A. ______ Demanded
• At A ________ Price

More
Higher
Lower
Price
Price
B
A
P1
P2
B
A
P2
P1
Md
Md
Q2
Q1
Quant
Q1
Q2
Quant
27
G. Change In Demand
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4
Shift

• 1. Concept __________Of The Demand Curve

2. Chart
Price
Md2
B
A
Md1
Quantity
28
A. SHIFT __________________B. Shift
__________________
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4
3. Cases 
Right - Upward
Left - Downward
4. Cause (Of Shift To Right)
A. Economic (1). Inc Income Shifts Curve
Right (2). Dec Income Shifts Curve Left
B. Non-economic (1). Population Size
29
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4
(2).Population Composition (A). Ethnic
(B) TYPE OF HOUSEHOLDS

• (3). Preferrences
• A. Nutritional
• B. Food Safety
• C. Life Style
• D. Technology
• E. Advertising

30
5. CONSEQUENCE (Of Shift To Right)
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4
More

• A.  _____  Demanded At _________ Price

More
B. Pay ______For _______Quantity
Same
Same
Price
Price
P2
Md1
P
P1
Md2
Md1
Md2
Q1
Q2
Q
Quant
Quant
31
Distinguish Between A Change In Demand A Change
In Quantity Demanded, Causes Consequences
Learning Objective
4
Change In Quantity Demand
Change In Quantity Supplied
Change In Demand
Change In Supply
Concept Chart Cases Causes Consequence
Concept Chart Cases Causes Consequence
Concept Chart Cases Causes Consequence
Concept Chart Cases Causes Consequence
32
PRICE ANALYSIS KOHLS UHL CHAPTER 8 PART
III MARKET EQUILBRIUM
33
A. Market Equilibrium
Learning Objective
Discuss Consequences Of Holding Price Above Or
Below Equilbrium
5
P
Ms
Md
Consumers Buy Everything Producers Produce (No
Waste) At The Market Price
Pe
Md
Qe
Q
34
B. Market Disequilbrium
Learning Objective
Discuss Consequences Of Holding Price Above Or
Below Equilbrium
5
1. Commodity Surplus
A. Chart
P
Ms
B. Case Surplus Of Good
Surplus
P1
C. Cause Price Held Above Equil
Pe
D. Conditions Govt Price Supports
Md
Qe
Qs
Q
Qd
35
E. Consequences
Learning Objective
Discuss Consequences Of Holding Price Above Or
Below Equilbrium
5

• 1. Producer Produce More Than The Consumers Want
  To Buy At That Price

2. Extra Quantity Must Be Bought Off The Market
By Govt To Maintain Prices
3. Inefficient Producer Encouraged To Stay In
Business
4. Taxpayer Get Hit With A Triple Whammy
A. Taxpayers Pay More At The Store
B. Taxpayer Pay To Process Store
C. Govt Gives Away Products Taxpayers Get
Nothing For Their Money
36
Learning Objective
Discuss Consequences Of Holding Price Above Or
Below Equilbrium
5
2. Commodity Shortage
P
A. Chart
B. Case Shortage Of Good
Ms
C. Cause Price Held Below Equil
Pe
D. Conditions 1. Price Ceilings 2. Import
Quotas
P2
Md
Qe
Q
Qs
Qd
37
e. CONSEQUENCES
Learning Objective
DISCUSS CONSEQUENCES OF HOLDING PRICE ABOVE OR
BELOW EQUILBRIUM
5

• 1. PRODUCERS PRODUCE LESS THAN THE CONSUMERS WANT
  TO BUY AT THAT PRICE

2. BLACK MARKETS
3. SUBJECTIVE ALLOCATION OF LIMITED QUANTITIES
(DISCRIMINATION)
4. DISTRIBUTION QUESTION NO LONGER DETERMINED BY
VOTES BY CONSUMERS
38
SUMMARY
KOHLS UHL CHAPTER 8 PRICE ANALYSIS
39
Self Test Price Analysis

• __ 1. Price Held Above Equilibrium
• __ 2. Chg In Quant Demanded
• __ 3. Demand Relationship
• __ 4. Rt Shift Of Demand
• __ 5. Supply Relationship
• __ 6. Chg In Quant Supplied
• __ 7. Demand Equals Supply
• __ 8. Govt Price Supports
• __ 9. Shift Of Supply Curve
• __10. Amt Bought _at_ Each Price

I
A. Chg In Input Price B. Chg In Prod Price C.
Demand Schedule D. Direct E. Equilibrium F.
Inverse G. More People H. Good Shortage I. Good
Surplus J. None Of Above
B
F
G
D
B
E
I
A
C
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Next Agricultural Marketing Topic

• Competition In The Food Industry