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Supply!

Supply!. Chapter 5. Supply. The quantity of goods and services that sellers are willing and able to supply http:// www.youtube.com/watch?v=KccMcf_xOQU. Supply Curve. The tendency of suppliers to offer greater quantities for sale at higher prices “An upward Sloping curve”. Law of Supply.

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Supply!

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  1. Supply! Chapter 5

  2. Supply • The quantity of goods and services that sellers are willing and able to supply • http://www.youtube.com/watch?v=KccMcf_xOQU

  3. Supply Curve • The tendency of suppliers to offer greater quantities for sale at higher prices • “An upward Sloping curve”

  4. Law of Supply • Law of Supply: • If prices are high, suppliers will offer greater quantities for sale • If prices are low, they will offer smaller quantities • There is a direct relationship between supply and price • A change in the quantity supplied: is often the result of a change in price! • Graphically illustrated by movements along the upward slopping supply curve! • How does this conflict with the Law of Demand?

  5. Changes in Supply • Changes in supply can occur for non-price reasons. These are the non-price determinants: • Resource Costs - Cost of Inputs • Other Goods or other opportunities • Taxes and/or subsidies • Technology and productivity • Expectations • Number of Sellers ROTTEN!

  6. Costs related to production • When you take fixedCostswhich are costs that always remain the same such as rent payments, salaries and add it to variablecosts which are costs that change constantly from week or moth to month such as cost of raw materials, utilities, gas then you have totalcosts which is the entire cost of running a business! • http://www.youtube.com/watch?v=nQ5APwtB-ig

  7. Cost affects Profit • Profits: profit is determined by taking total costs away from total revenue. • Total Revenue: the number of units sold times the price per unit. • 50 units x $2 each = $100 total revenue • Total revenue= Total cost = Break-even point! (this is not ideal, ok for when starting) • Total revenue > total cost = profit (Ideal!) • Total revenue < total cost = debt, bankruptcy, etc.

  8. Elasticity of Supply! • DEF.: The responsiveness of price change to quantity of goods and services suppliers are willing and able to offer! • Elastic supply: small price change in either direction can cause drastic changes in amount supplied in the same direction (direct relationship) • Inelastic Supply: small price change in either direction causes no change in amount supplied in any direction! • How to know when elastic: • if business can adjust quickly to new prices and increase its production right away, that supply is ELASTIC! • If that business’s needs a long time to adjust and as part of it requires heavy investment and lot of spending of money, then that supply is INELASTIC!

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