Econ: Law of supply
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Econ: Law of supply

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Tuesday-Wednesday 2/7-2/8 2012

Tuesday-Wednesday 2/7-2/8 2012

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Econ: Law of supply Econ: Law of supply Presentation Transcript

  • Bellringer
    • If the price of Playstation 2 games is decreasing, how would you predict firms would react?
    • Describe a scenario where a firm might want to produce more of a good or service.
  • For example….
    • Average prices of
    • Therefore…..
  • Revenue
    • The amount of money a firm brings in
    • Price X goods sold
    • Different than Profit
    • For example:
    • Nokia sells cell phones
    Price Quantity Demanded (in thousands) $50 100 $100 70 $150 50 $200 20 $250 10
  • Revenue
    • The amount of money a firm brings in
    • Price X goods sold
    • Different than Profit
    • For example:
    • Nokia sells cell phones
    Price Quantity Demanded (in thousands) $50 100 $5000 $100 70 $7000 $150 50 $7500 $200 20 $4000 $250 10 $2500 Revenue
  • Law of Supply
    • As the price of a good increases, producers will produce more quantity. As the price of the good decreases, producers will produce less quantity.
    • P Q and P Q
    • The supply curve is always
    • upward sloping
    $ Q S
  • Graph one: A Supply Curve Price of Widgets Number of Widgets Sellers Want to Sell $1.00 10 $2.00 40 $3.00 70 $4.00 140
  • For example….
  •  
  • If price changes Q*supply,
    • What changes supply?
  • 4 Determinants of Supply
    • Price of production + or -
    • Taxes, regulation, raw materials, labor
  • 4 Determinants of Supply
    • Expectations
    • If future P$ might rise, hold inventory
    • If future P$ might fall, increase supply
  • 4 Determinants of Supply
    • Sellers (increase or decrease)
    Tucson BBQ market Tucson Video Rental Market
  • 4 Determinants of Supply
    • Technology
    • Increases productivity
  • 4 Determinants of Supply
    • Mnemonic
    • P rice of Production
    • E xpectations
    • S ellers (#)
    • T echnology
    • PEST = supply determinants
    • TRIBE = demand determinants
  • Diff between supply and Demand Xbox games
    • Supply or demand change?
    • Determinant
  • Diff between supply and Demand xbox games
    • Supply or demand change?
    • Determinant
  • Diff between supply and Demand Wheat
    • Supply or demand change?
    • Determinant
    locusts
  • Diff between supply and Demand Used clothing
    • Supply or demand change?
    • Determinant
  • Diff between supply and Demand Florida Oranges
    • Supply or demand change?
    • Determinant
  • Diff between supply and Demand Dog food
    • Supply or demand change?
    • Determinant
  • Diff between supply and Demand Dog food
    • Supply or demand change?
    • Determinant
  • Diff between supply and Demand Salsa
    • Supply or demand change?
    • Determinant
  • Diff between supply and Demand Salsa
    • Supply or demand change?
    • Determinant
    CLOSED
  • Diff between supply and Demand Salsa
    • Supply or demand change?
    • Determinant
  • Diff between supply and Demand Community College Classes
    • Supply or demand change?
    • Determinant
    At Florida universities
  • Diff between supply and Demand Hot Dog Buns
    • Supply or demand change?
    • Determinant
    At Florida universities
  • Group Activity “How much should you produce?”
    • Groups of 2
    • One a single sheet of paper with everyone’s name answer these ?:
    • Suppose you run a chicken farm. You have 1200 chickens who can lay up to 2 eggs per week. Write your reactions to the following situations:
    • How many dozen eggs can you produce per week?
    • If the price of 1 dz. eggs was $1/dozen, how much revenue would you make per week?
    • If the price of chicken feed is $0.25/chicken/week, based on your revenue, what would you do?
    • If the price of 1 dz. eggs increases to $2/dozen
    • The economist who works for the local Grange predicts that egg prices will climb to $4/dozen by the Fall.
    • The price of chicken feed falls to only $0.10/chicken/week
    • You read about a new drug that can make chickens increase egg production that costs $500 for all your chickens (1 time dose)
    • The price of chicken meat increase from $1.50/lb to $4/lb
    • Graph the supply of eggs using this supply schedule
    • Formulate a scenario that might make you produce more eggs
    Price/Dz $0.50 $1.00 $1.50 $2.00 $2.50 Dozen 100 200 300 400 500