Briones1.6Supply

Objective: Use the supply model to describe seller behavior in a market economy. Explain the relationship between price and quantity supplied. Describe other factors that can cause supply to shift and explain how they will shift supply.

Topics for Exploration:

Briones1.6Supply

•supply

•quantity supplied

•law of supply

•supply curves

•change in S v. QS

•reasons for the law of supply

◦profit motive

◦diminishing marginal returns

Briones1.6Supply

Define the Law of Supply / Video 1: Law of Supply
Supply Schedule for Grapes Supply Curve / Example: Grapes
Video 2: Factors Affecting Supply.(These will be on the video, but not in the same order!!!)
1. Technology
2. Expectations about the future
3. Number of Sellers/Producers/Firms
4. Other related goods
5. Resources/Inputs
6. Government (Not in video)

Recap: Use the supply model to describe seller behavior in a market economy. Explain the relationship between price and quantity supplied. Describe other factors that can cause supply to shift and explain how they will shift supply.

Practice Problems (If you are ready to try these, great! If not, wait until tomorrow night!!!)

  1. Explain whether each of the following events represents (i) a change in supply or (ii) a movement along the supply curve.
  2. During a real estate boom that causes house prices to rise, more homeowners put their houses up for sale.
  3. Many strawberry farmers open temporary roadside stands during harvest season, even though prices are usually low at that time.
  4. Immediately after the school year begins, fewer young people are available to work. Fast-food chains must raise wages, which represent the price of labor, to attract workers.
  5. Immediately after the school year begins, fewer young people are available to work. Fast-food chains must raise wages, which represent the price of labor, to attract workers.
  6. Since new technologies have made it possible to build larger cruise ships (which are cheaper to run per passenger), Caribbean cruise lines have offered more cabins, at lower prices, than before.
  7. Which of the following will decrease the supply of good “X”?
  8. There is a technological advance that affects the production of all goods.
  9. The price of good “X: falls.
  10. The price of good “Y”, a substitute in consumption for good “X:, decreases
  11. The wages of workers producing good “X: increase
  12. The demand for good “X: decreases
  13. An increase in the demand for steak will lead to an increase in which of the following?
  14. the supply of steak
  15. the supply of hamburger (a substitute in producers)
  16. the supply of chicken (a substitute in consumption)
  17. the supply of leather (a complement in production)
  18. the demand for leather
  19. A technological advance in textbook production will lead to which of the following?
  20. a decrease in textbook supply
  21. an increase in textbook demand
  22. an increase in textbook supply
  23. a movement along the supply curve for textbooks
  24. an increase in textbook prices.
  25. Draw a correctly labeled graph showing the market for oranges in equilibrium. Show on your graph how a hurricane that destroys large numbers of orange groves in Florida will affect supply, if at all.