Economics. Changes in Quantity Supplied Changes Along a Supply Curve Change in quantity supplied...
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Transcript of Economics. Changes in Quantity Supplied Changes Along a Supply Curve Change in quantity supplied...
![Page 1: Economics. Changes in Quantity Supplied Changes Along a Supply Curve Change in quantity supplied does not shift the supply curve movement to right means.](https://reader035.fdocuments.net/reader035/viewer/2022062417/551590ec55034674578b599d/html5/thumbnails/1.jpg)
Economics
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Changes in Quantity Supplied Changes Along a Supply Curve
Change in quantity supplied does not shift the supply curve○ movement to right means increase in price
and quantity supplied○ movement to left means decrease in price
and quantity suppliedMarket supply curves show larger changes
than individual curves
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Changes in quantity supplied do not shift the position of the supply curve. Why?
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Changes in Supply
Change in supply—producers offer different amounts at every price
As production costs rise, supply drops; as costs drop, supply rises
Change in supply shifts the supply curve Six factors cause change in supply
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Changes in Supply
Factor 1: Input CostsInput costs—price of resources needed to
produce good or service○ if price of resource increases, costs
increase○ if price of resource decreases, costs
decrease
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Changes in Supply
Factor 2: Labor ProductivityLabor productivity—amount of product
worker can produce in set timeRise in productivity lowers production costs;
supply increasesSpecialization can allow producer to make
more goods at lower costBetter-trained workers produce more in less
time; decrease costs
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Changes in Supply
Factor 3: TechnologyTechnology—use of scientific methods,
discoveries in production○ results in new products or manufacturing
techniquesManufacturers use technology to make
goods more efficientlyTechnology enables workers to be more
productive
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Changes in Supply
Factor 4: Government ActionExcise tax—tax on production or sale of specific
good or service○ often placed on items that government wants to
discourage use of○ taxes increase producers’ costs; decrease supply
Regulation—set of rules, laws designed to control business behavior○ examples: banning use of certain resources,
worker safety laws
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Changes in Supply
Factor 5: Producer ExpectationsProducers have expectations about future price of
their product○ expectations affect how much they will supply at
presentExpectations of higher price in future may lead to
different actions○ Farmer may withhold part of current crop and
decrease supply○ Manufacturer may buy more equipment to increase
future supply
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Changes in Supply
Factor 6: Number of ProducersWhen one producer has successful new
idea, others enter the market○supply of good or service increases
Increase in number of producers leads to increased competition○may drive less-efficient producers out
of market
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Questions Complete the chart below.
Factor That Changes Supply Reason Why Supply Changes
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Questions1. How do each of these examples of government actions affect
the supply of gasoline?
a. In 2005, the government continued support for ethanol, a gasoline substitute.
b. The state of California requires a special blend of gasoline that meets stricter environmental standards than other regions in the country.
c. Many state use gasoline taxes to help fund highway construction and maintenance.
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Questions
Why do you think governments want to influence the supply of alcohol and tobacco products by imposing excise taxes?
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Questions
Complete the chart below for a manufacturer of MP3 players.
Example Change That Affects Supply Factor and How It Affected Supply
You give each worker in your factory a specialized job
Price of computer chips used in MP3 players rises
New machinery speeds up the manufacturing process
Your success prompts three new companies to start producing MP3 players
A new law requires producers to recycle the wastewater from their factories.