1. 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 $7.50

2. Elastic or Inelastic?

3. Elastic or Inelastic?

4. Elastic or Inelastic?

5. Elastic or Inelastic?

6. Elastic or Inelastic?

7. Graph subway workers on
board
• Jumping jacks market

8. 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

9. For example….
• Average prices of
• Therefore…..

10. 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

11. Producer Surplus
• Difference between cost and sale price
• IOW: profit
• Sale: $15
• Cost: $10
• PS = $5

12. For example….

14. 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)

15. If price changes Q*supply,
What changes supply?

16. 4 Determinants of Supply
• Price of production + or -
• Taxes, regulation, raw
materials, labor

17. 4 Determinants of Supply
• Expectations of future price
• If future P$ might rise, hold inventory
• If future P$ might fall, increase supply

18. 4 Determinants of Supply
• Sellers (increase or decrease)

19. 4 Determinants of Supply
• Technology

20. 4 Determinants of Supply
Mnemonic
• Price of Production
• Expectations
• Sellers (#)
• Technology
•PEST = supply determinants
•TRIBE = demand determinants

21. PEST Changes Assignment
• For each part of PEST, identify one positive
and negative change to the car or computer
market and sketch a correctly drawn graph

22. Diff between supply and Demand
Xbox games
• Supply or demand change?
• Determinant

23. Diff between supply and Demand
Wheat
• Supply or demand change?
• Determinant
locusts

24. Diff between supply and Demand
New cars
• Supply or demand change?
• Determinant

25. Diff between supply and Demand
Used clothing
• Supply or demand change?
• Determinant

26. Diff between supply and Demand
Dog food
• Supply or demand change?
• Determinant

27. Diff between supply and Demand
Dog food
• Supply or demand change?
• Determinant

28. Diff between supply and Demand
Salsa
• Supply or demand change?
• Determinant

29. Diff between supply and Demand
Salsa
• Supply or demand change?
• Determinant

30. Diff between supply and Demand
Salsa
• Supply or demand change?
• Determinant

31. 1 change to Demand (TRIBE)
• Choose 1 market
• Xbox360s, pizza, Gatorade, hotel rooms
1 change to Supply (PEST)