4. Why do firms care?
• Demand predicts revenue
• Revenue = Price X Quantity sold
Cookies
Price QD*Day Revenue
$0.20 7
$0.40 4
$0.60 2
$0.80 1
$1.00 1
$1.20 0
5. ON Slates
What price should this company choose if
they want to maximize revenue?
6. What is the minimum, per hour I would
have to pay you to work at Subway?
MANKIW
CHAPTER 4 ALL WEEK
Pretend there is no minimum wage and you could work for less than $7.50
7. Law of Supply
• As the price of a good increases, producers will
produce more (,or try to) 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
8. Push ups market:
A Supply Curve
Price of
pushups
Number of
pushup
Sellers
1 QE
2 QE
3 QE
4 QE
5 QE
Graph on board
9. 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
14. Bellringer on slates
Think back to yesterday’s push up experiment
Brainstorm 3 ways we could have increased the
entire supply curve of pushups, that is, more
QD at every price level
