SUPPLY

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SUPPLY

• Supply is the quantity of goods and services that
  producers are willing to offer at various
  possible prices during a given time period.

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LAW OF SUPPLY

• Producers supply more goods and services when
  they can sell them at higher prices and fewer
  when they must sell at lower prices.

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LAW OF SUPPLY

• What motivates Producers?
• Profit the amount of money remaining after
  producers have paid all costs.
• What Costs?
• Costs of Production rent, interest on loans,
  bills for utilities, wages and benefits, raw
  materials, advertising, insurance, legal fees,
  etc.

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SUPPLY

• Supply Schedule
• Lists each quantity of a product that producers
  are willing to supply at various market prices

• Supply Curve
• Plots on a graph the information from a supply
  schedule.
• Each point on the graph represents a specific
  combination of price and quantity supplied.

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SUPPLY

• Supply Schedule

• Supply Curve

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ELASTIC SUPPLY

• Elastic Supply exists when a small change in
  price causes a major change in the quantity
  supplied.
• Products can usually be made quickly,
  inexpensively, and using few and readily
  available resources.

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THE PRICE ELASTICITY OF SUPPLY
1. A 10 rise in the price of a book,
2. Increases the quantity supplied by 20.
3. The supply of books is elastic.
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ELASTIC SUPPLY

• Example Sport teams souvenirs such as t-shirts,
  hats, posters, etc. When a team wins a
  championship the supply of these goods rises
  rapidly.

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INELASTIC SUPPLY

• Inelastic Supply exists when a change in a
  goods price has little impact on the quantity
  supplied. Inelasticity exists when production
  requires a great deal of time, money, and
  resources are not readily available.

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INELASTIC SUPPLY

• Examples

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PERFECTLY INELASTIC SUPPLY

• Perfectly Inelastic Supply exists when a
  producer, regardless of price cannot increase the
  quantity supplied.

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THE PRICE ELASTICITY OF SUPPLY
1. A small rise in the price of a beachfront lot,
2. Increases the quantity supplied by 0.
3. The supply of beachfront lots is perfectly
inelastic.
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PERFECTLY INELASTIC SUPPLY

• Examples

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