Economics 4609 http:students'resa'netmilewski

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Economics 4/6/09 http//students.resa.net/milewsk
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• OBJECTIVE Demonstration of Chapter4 and begin
  examination of supply.
• I. Administrative Stuff
• -attendance
• -distribution of test
• II. Chapter4 Test
• III. Journal 15 pt.A
• -Examine Figure 5.1 Figure 5.2 p.114115
• 1.) How does the Law of Supply differ from the
  Law of Demand?
• 2.) Why are the supply curves upward sloping?
• II. Journal 15 pt.B
• -notes on supply

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Law of Supply

• The principle that suppliers will normally offer
  more for sale at higher prices and less at lower
  prices.
• As price goes up, quantity produced also goes up

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Supply Curve

• At high prices more will be supplied. At lower
  prices, less will be supplied.
• Price and quantity supplied are directly related.
• The drawing to the right is a typical supply
  curve.

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Supply Schedule

• Supply schedule is just like the demand schedule,
  but the supply schedule shows both quantity
  supplied and price rise together.

Quantity Supplied
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Construct a Supply curve using the following data
Quantity Supplied
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On your supply curve

• Label the point where price is 15 and quantity
  supplied 4 units as point a.
• Next label the point where price is 20 and
  quantity supplied is 6 units as point b.
• Movement from point a to point b, or to any other
  point along the supply curve is movement in
  quantity supplied.

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Movement along the Supply Curve/ Change in
quantity supplied.
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Change in supply

• A change in supply occurs when something happens
  to cause suppliers to offer different amounts of
  products for each price in the market.

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Change in supply

• A change in supply occurs when something happens
  to cause suppliers to offer different amounts of
  products for each price in the market.

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What can cause a change in supply to the right?

• Lower cost of inputs such as cheaper labor or
  cheaper packaging
• More productive/better trained labor.
• New technology like more fuel efficient delivery
  vehicles, better/faster machines
• Lower taxes/government subsidies (subsidy is a
  government payment to an individual or business
  to encourage or protect a certain economic
  activity.)

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What can cause a change in supply to the left?

• More expensive labor
• Higher taxes
• Less efficient workers
• Broken technology
• Withdrawal of subsidies

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Economics 4/7/09 http//students.resa.net/milewsk
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• OBJECTIVE Examine supply elasticity.
• I. Journal 16 pt.A
• -Read Profiles in Economics p.121
• -Answer question 1 p.121
• II. Return of Chapter4 Test
• III. Journal 16 pt.B
• -notes on the elasticity of supply
• IV. Econ U.S.A. episode16
• -questions on film

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Supply Elasticity
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Supply Elasticity

• Supply elasticity is caused by the ability of a
  producer to change output.
• If producers can increase output quickly, supply
  is elastic.
• If producers can not increase output quickly,
  supply is inelastic.

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Theory of Production

• The relationship between the factors of
  production (land, labor, capital, entrepreneurs)
  and output of goods and services.
• Short run change in the variable of labor
• Long run change in land capital

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Economics 4/8/09 http//students.resa.net/milewsk
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• OBJECTIVE Examine supply elasticity.
• I. Journal 17 pt.A
• -Read The Global Economy p.130
• -Answer questions (1-2) p.130
• II. Journal17 pt.B
• -notes on the theory of production
• III. Econ Film
• -questions on film

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Theory of Production

• The relationship between the factors of
  production (land, labor, capital, entrepreneurs)
  and output of goods and services.
• Short run change in the variable of labor
• Long run change in land capital

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Law of Variable Proportions

• Stage I Increasing returns
• output rises at an increasingly faster rate
  (each new worker makes more than the previous
  worker did)
• Stage II Diminishing returns
• output rises at a diminishing rate (each new
  worker increases output, but not as much as the
  previous worker did)
• Stage III Negative returns
• output decreases as each new worker is added

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Marginal Costs Profits
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Measure of Costs

• Fixed cost the cost that a business incurs even
  if the plant is idle and production is zero
• -salaries to executives
• -interest on bonds
• -rent payments
• -taxes
• -depreciation
• Overhead total fixed cost

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• Variable costs costs that change when output
  changes
• -hourly workers
• -power
• -freight charges
• -raw materials
• Total costs the sum of fixed and variable costs
• Turn to page 133

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Directions

• 1.) Identify the factors of production in the
  film.
• 2.) Identify the public goods in the film.

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Economics 4/9/09http//students.resa.net/milewski

• OBJECTIVE Working with supply.
• I. Administrative Stuff
• -attendance
• -follow ups
• II. Math Practice with Economics
• III. Mindjogger
• -video quiz on Chapter5 Demand
• IV. Chapter5 Review