Economics 1/10/11
http://mrmilewski.com
• OBJECTIVE: Demonstration of Chapter#4 and begin
examination of supply.
• I. Administrative Stuff
-attendance
-distribution of test
• II. Chapter#4 Test
• III. Journal #14 pt.A
-Examine Figure 5.1 & Figure 5.2 p.114&115
1.) How does the Law of Supply differ from the Law of
Demand?
2.) Why are the supply curves upward sloping?
• IV. Journal #14 pt.B
-notes on supply
Law of Supply
•
•
The principle that suppliers will normally
offer more for sale at higher prices and
less at lower prices.
As price goes up, quantity produced also
goes up
Supply Curve:
• At high prices more
will be supplied. At
lower prices, less will
be supplied.
• Price and quantity
supplied are directly
related.
• The drawing to the
right is a typical
supply curve.
Supply Schedule
• Supply schedule is just
like the demand
schedule, but the
supply schedule shows
both quantity supplied
and price rise together.
Quantity
Supplied
Construct a Supply curve using the
following data
Quantity
Supplied
On your supply curve
• Label the point where price is $15 and
quantity supplied 4 units as point a.
• Next label the point where price is $20 and
quantity supplied is 6 units as point b.
• Movement from point a to point b, or to any
other point along the supply curve is
movement in quantity supplied.
Movement along the Supply Curve/
Change in quantity supplied.
Change in supply
• A change in supply
occurs when
something happens to
cause suppliers to
offer different amounts
of products for each
price in the market.
Change in supply
• A change in supply
occurs when
something happens to
cause suppliers to
offer different amounts
of products for each
price in the market.
What can cause a change in supply to the right?
• Lower cost of inputs such as cheaper labor or
cheaper packaging
• More productive/better trained labor.
• New technology like more fuel efficient delivery
vehicles, better/faster machines
• Lower taxes/government subsidies (subsidy is a
government payment to an individual or business
to encourage or protect a certain economic
activity.)
What can cause a change in supply to the left?
•
•
•
•
•
More expensive labor
Higher taxes
Less efficient workers
Broken technology
Withdrawal of
subsidies
Economics 1/11/11
http://mrmilewski.com
• OBJECTIVE: Examine supply elasticity.
• I. Journal #15 pt.A
-Read “Profiles in Economics” p.121
-Answer question #1 p.121
• II. Return of Chapter#4 Test
• III. Quiz #9
• IV. Journal #15 pt.B
-notes on the elasticity of supply
• V. Econ U.S.A. episode#16
-questions on film
Supply Elasticity
Type of Elasticity
Change in Quantity
Supplied Due to a
Change in Price
Elastic
More than proportional
Unit Elastic
Proportional
Inelastic
Less than proportional
Supply Elasticity
• Supply elasticity is caused by the ability of
a producer to change output.
• If producers can increase output quickly,
supply is elastic.
• If producers can not increase output quickly,
supply is inelastic.
Theory of Production
• The relationship between the factors of
production (land, labor, capital,
entrepreneurs) and output of goods and
services.
• Short run – change in the variable of labor
• Long run – change in land & capital
Economics 1/12/11
http://mrmilewski.com
• OBJECTIVE: Examine supply elasticity.
• I. Journal #16 pt.A
-Read “The Global Economy” p.130
-Answer questions (1-2) p.130
• II. Journal#16 pt.B
-notes on the theory of production
• III. Journal#16 pt.C
-questions on film about innovation
• IV. Math Practice with Economics
Theory of Production
• The relationship between the factors of
production (land, labor, capital,
entrepreneurs) and output of goods and
services.
• Short run – change in the variable of labor
• Long run – change in land & capital
Law of Variable Proportions
• Stage I – Increasing returns
*output rises at an increasingly faster rate (each new
worker makes more than the previous worker did)
• Stage II – Diminishing returns
*output rises at a diminishing rate (each new worker
increases output, but not as much as the previous worker
did)
• Stage III – Negative returns
*output decreases as each new worker is added
Measure of Costs
• Fixed cost – the cost that a business incurs even if
the plant is idle and production is zero
-salaries to executives
-interest on bonds
-rent payments
-taxes
-depreciation
• Overhead – total fixed cost
• Variable costs – costs that change when output
changes
-hourly workers
-power
-freight charges
-raw materials
• Total costs – the sum of fixed and variable costs
• Turn to page 133
From Poop to Profits
• 1.) What is innovation? What does it have
to do with entrepreneurship?
• 2.) Why did Brad Morgan keep refining his
products and processes?
• 3.) Why do entrepreneurs need freedom?
• 4.) What do the farmer and the bookstore
owner have in common?
Economics 1/13/11
http://mrmilewski.com
• OBJECTIVE: Examine the concepts related to Supply.
• I. Chapter#5 Guided Readings
Complete the following activities due today!
-Chapter#5 section#1 Guided Reading
-Chapter#5 section#2 Guided Reading
-Chapter#5 section#3 Guided Reading
• II. Chapter#5 Review
-Review for Chapter#5 Test
Economics 1/14/11
http://mrmilewski.com
• OBJECTIVE: Working with supply.
• I. Administrative Stuff
-attendance
-follow ups
• II. Quiz#10
• III. Economics Lab
-Supply & Demand
• IV. Mindjogger
-video quiz on Chapter#5 Supply
• V. Chapter#5 Review/Small Business Film
Where will profits be maximized?
Directions
• 1.) Identify the factors of production in the
film.
• 2.) Identify the public goods in the film.