Briones
1.6 Supply
Objective: Use the supply model to describe seller behavior in a market economy. Explain the
relationship between price and quantity supplied. Describe other factors that can cause supply to shift
and explain how they will shift supply.
Topics for Exploration:
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supply
quantity supplied
law of supply
supply curves
change in S v. QS
Define the Law of Supply
Supply Schedule for Grapes
reasons for the law of supply
◦ profit motive
◦ diminishing marginal returns
Video 1: Law of Supply
Supply Curve
Example: Grapes
Video 2: Factors Affecting
Supply.(These will be on the
video, but not in the same
order!!!)
1. Technology
2. Expectations about the
future
Briones
1.6 Supply
3. Number of
Sellers/Producers/Firms
4. Other related goods
5. Resources/Inputs
6. Government (Not in
video)
Recap: Use the supply model to describe seller behavior in a market economy. Explain the relationship
between price and quantity supplied. Describe other factors that can cause supply to shift and explain
how they will shift supply.
Briones
1.6 Supply
Practice Problems (If you are ready to try these, great! If not, wait until tomorrow night!!!)
1. Explain whether each of the following events represents (i) a change in supply or (ii) a movement along
the supply curve.
a. During a real estate boom that causes house prices to rise, more homeowners put their houses
up for sale.
b. Many strawberry farmers open temporary roadside stands during harvest season, even though
prices are usually low at that time.
c. Immediately after the school year begins, fewer young people are available to work. Fast-food
chains must raise wages, which represent the price of labor, to attract workers.
d. Immediately after the school year begins, fewer young people are available to work. Fast-food
chains must raise wages, which represent the price of labor, to attract workers.
e. Since new technologies have made it possible to build larger cruise ships (which are cheaper to
run per passenger), Caribbean cruise lines have offered more cabins, at lower prices, than
before.
2. Which of the following will decrease the supply of good “X”?
a. There is a technological advance that affects the production of all goods.
b. The price of good “X: falls.
c. The price of good “Y”, a substitute in consumption for good “X:, decreases
d. The wages of workers producing good “X: increase
e. The demand for good “X: decreases
3. An increase in the demand for steak will lead to an increase in which of the following?
a. the supply of steak
b. the supply of hamburger (a substitute in producers)
c. the supply of chicken (a substitute in consumption)
d. the supply of leather (a complement in production)
e. the demand for leather
4. A technological advance in textbook production will lead to which of the following?
a. a decrease in textbook supply
b. an increase in textbook demand
c. an increase in textbook supply
d. a movement along the supply curve for textbooks
e. an increase in textbook prices.
5. Draw a correctly labeled graph showing the market for oranges in equilibrium. Show on your graph how a
hurricane that destroys large numbers of orange groves in Florida will affect supply, if at all.