A quick revision about supply

1. Supply Warm Ups
Unit 2

2. 2/27/13:
•You’re selling coffee.
•You think you can sell it for $.25 a
cup. How much effort will you put into
your business?
•What if you could sell it for $4.75 a
cup? How much effort will you put
into your business?

3. 2/28/13: Graph: Change in Quantity
Supplied or Change in Supply
• Jeans are selling for a higher price
(jeans).
• Wheat farmers hear that corn is
selling for a higher price (corn).
• Paper has become more expensive
(books).

4. Supply of Jeans
Increase in
Quantity
Supplied (due
to a price
change)
Price
Quantity
S
A
B
P1
P2
Q1 Q2

5. Price
Quantity
S1
S2
Supply of Corn
Increase in
Supply
---Price of
Related Goods

6. Price
Quantity
S2
S1
Supply of Books
Decrease in
Supply
---Cost of
Inputs/Factors
of Production

7. 3/1/13:
• Toyota realizes it could sell its
Hybrid cars for a higher price
(Toyota Tundra, a gas-guzzling
truck).
• The government has given
subsidies to local wheat farmers
(wheat).

8. Price
Quantity
S2
S1
Supply of Toyota Tundra
Decrease in
Supply
---Price of
Related Goods

9. Price
Quantity
S1
S2
Supply of Wheat
Increase in
Supply
---Government
Subsidy

10. 3/4/13:
• A cell phone company who was still
making flip phones finds out smart
phones sell for a higher price (flip
phones).
• The price of cotton has increased
(cotton T-Shirts).

11. Price
Quantity
S2
S1
Supply of Flip Phones
Decrease in
Supply
---Price of
Related Goods

12. Price
Quantity
S2
S1
Supply of Cotton T-Shirts
Decrease in
Supply
---Cost of
Inputs/Factors
of Production

13. 3/4/13:
• Summer is approaching, so soon
customers will be ready to buy
swimsuits (swimsuits).
• Workers in a shoe factory are now
working in better conditions, so
they are happier and work harder
(shoes).

14. Price
Quantity
S1
S2
Supply of Swimsuits
Increase in
Supply
---Producer
Expectations

15. Price
Quantity
S1
S2
Supply of Shoes
Increase in
Supply
---
Technology/Pr
oductivity

16. 3/4/13:
• The price of televisions has
increased (SUPPLY of televisions).
• The price of televisions has
increased (DEMAND for
televisions).

17. Supply of Televisions
Increase in
Quantity
Supplied (due
to a price
change)
Price
Quantity
S
A
B
P1
P2
Q1 Q2

18. Price
Quantity
D1
Demand for Televisions
Decrease in
QUANTITY
demanded due to
price change
A
B
P2
P1
Q
2
Q
1

19. 3/4/13:
• The price of televisions will
decrease in two months (demand
for televisions).
• The unemployment rate has
increased (demand for cars).

20. Price
Quantity
D2
D1
Demand for Televisions
Decrease in
demand
*Expectations for
future prices

21. Price
Quantity
D2
D1
Demand for Cars
Decrease in
demand
*Income – Normal
Good