NON PRICE FACTORS THAT CAN SHIFT AN ENTIRE

SUPPLY CURVE

Determinants of Supply

Cost of Resources

Cost of resources = cost of production. Prices of the resources needed to produce a good or service

Cost increases = supply decreasesCost decreases = supply increases

Technology

Technology will always increase supply in the long run.

Competition

Competition is referring to the number of products available in the market

Ex. Puffs 100 Kleenex 100 Kroger brand 100 Total 300

If Puffs goes out of business there are less products available in the market. There would only be 200 available.

Comp. increases = supply increases (# available goes up) Comp. decreases = supply decreases (# available goes

down)

Government is also a determinant, but first

Watch Stossel and government subsidy’s.

Government

Government regulations on producers can influence supply

Taxes – what a business must pay to the government

Regulations – rules that must be followed (pollution)

Subsidies – payments for doing what the gov wants

Ex. Taxes increase = supply decreases (less to spend)

Taxes decrease = supply increase (more to spend)

Producer expectations

If producers expect a product to be demanded in the future, they will produce it NOW on the expectation they will make money on it down the road.

Ex. – Halloween candy is made in the spring.

Prices of Related Goods

A related good is one that is similar to the good you are currently producing.

Ex. Brush and a comb You are currently producing brushes. You

notice that the price of combs is increasing . You think you could make a better profit on combs. Therefore, you switch your production to the related good (combs) to increase the possibility of a profit.

The 6 Determinants of supply

1. Cost of resources2. Technology3. Competition4. Government5. Producer expectations6. Price of related goods

Changes in a supply curve

The right is still an increaseThe left is still a decrease

SC3

decrease SC1

increase

SC2

Worksheet

Fun time!! Complete the worksheet on supply for ecobits. It is a grade