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In your notes:
What is the minimum, per hour I would
have to pay you to work at Subway?
Pretend there is no minimum wage and you could work for less than $7.85
Graph subway workers on
board
• Jumping jacks market
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 Qs and P Qs
The supply curve is always
upward sloping
$
Q
S
For example….
• Average prices of
• Therefore…..
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
Producer Surplus
• Difference between cost and sale price
• IOW: profit
• Sale: $15
• Cost: $10
• PS = $5
For example….
3   law of supply
In your groups
• Choose either a computer company or a car
company
• Your boss wants your group to figure out how to
produce MORE of your goods per year
• Consider every factor of production (land, labor,
capital)
If price changes Q*supply,
What changes supply?
4 Determinants of Supply
• Price of production + or –
• Resources
• Taxes
• regulation
4 Determinants of Supply
• Expectations of future price
• If future P$ might rise, hold inventory
• If future P$ might fall, increase supply
4 Determinants of Supply
• Sellers (increase or decrease)
4 Determinants of Supply
• Technology
4 Determinants of Supply
Mnemonic
• Price of Production
• Expectations
• Sellers (#)
• Technology
•PEST = supply determinants
•TRIBE = demand determinants
PEST Changes Assignment
1. For each part of PEST, identify one positive
and negative change to the car or computer
market and sketch a correctly drawn graph
2. Find an article either on your phone or in a
financial magazine, write the headline, the
market, part of PEST that is changing and
graph it.

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3 law of supply

  • 1. In your notes: What is the minimum, per hour I would have to pay you to work at Subway? Pretend there is no minimum wage and you could work for less than $7.85
  • 2. Graph subway workers on board • Jumping jacks market
  • 3. 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 Qs and P Qs The supply curve is always upward sloping $ Q S
  • 4. For example…. • Average prices of • Therefore…..
  • 5. 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
  • 6. Producer Surplus • Difference between cost and sale price • IOW: profit • Sale: $15 • Cost: $10 • PS = $5
  • 9. In your groups • Choose either a computer company or a car company • Your boss wants your group to figure out how to produce MORE of your goods per year • Consider every factor of production (land, labor, capital)
  • 10. If price changes Q*supply, What changes supply?
  • 11. 4 Determinants of Supply • Price of production + or – • Resources • Taxes • regulation
  • 12. 4 Determinants of Supply • Expectations of future price • If future P$ might rise, hold inventory • If future P$ might fall, increase supply
  • 13. 4 Determinants of Supply • Sellers (increase or decrease)
  • 14. 4 Determinants of Supply • Technology
  • 15. 4 Determinants of Supply Mnemonic • Price of Production • Expectations • Sellers (#) • Technology •PEST = supply determinants •TRIBE = demand determinants
  • 16. PEST Changes Assignment 1. For each part of PEST, identify one positive and negative change to the car or computer market and sketch a correctly drawn graph 2. Find an article either on your phone or in a financial magazine, write the headline, the market, part of PEST that is changing and graph it.