Supply Supply Supply A sellers willingness and ability

Supply!

Supply • Supply: A seller’s willingness and ability to sell 2

Supply • Law of Supply: – When the price of a good rises, suppliers want to sell more of it – When the price of a good falls, suppliers want to sell less of it

Drawing Supply • We can draw a business’ supply at different prices on a graph, called a supply curve • Shows how much quantity you would supply at a certain price

Why does Supply go up? Remember the Law of Supply: • The higher the price, the _____ a seller will supply • The lower the price, the _____ a seller will supply 5

How does Supply Change • Costs of factors of production – When price of resources goes up, supply goes down because it costs suppliers more to produce 6

How does Supply Change • Technology – When technology increases, supply goes up because suppliers can now produce more

How does Supply Change • Number of Sellers – The more sellers, the higher supply because more people are selling stuff

How does Supply Change • Expectations of Future Price – If sellers think the price will rise in the future, supply now drops because they will hold off selling until later (they want a higher price b/c they make more money)

How does Supply Change • Taxes – When taxes rise, supply goes down because there are extra costs

How does Supply Change • Subsidies – Opposite of tax (they give business money); causes supply to go up because it lets businesses produce cheaper

How does Supply Change • Supply Shocks (natural disasters) – When a supply shock happens, supply goes down

What does supply change look like? • When supply decreases, it shifts left • When supply increases, it shifts right