chapter 5 section 1. supply – the amount of goods available law of supply ◦ producers offer...
TRANSCRIPT
Understanding Supply
Chapter 5 Section 1
Supply – the amount of goods available Law of Supply
◦ Producers offer more of a good as its price increases and less as its price falls
The Law of Supply
Law of SupplyPrice Supply
Higher production = higher profit Market Entry – more want in on the business
◦ Example – all the different pizza places in Avon
Why Does Supply Increase
Price Per Slice of Pizza Slices Supplied Per Day
$1 100
$2 150
$3 200
$4 250
$5 300
$6 350
Supply Schedule
Can You Graph This?
Elasticity of Supply◦ A measure of the way quantity supplied reacts to
a change in price◦ More than 1 = Elastic, Less than 1 = inelastic
Equal to 1 = Unitary Elastic
Supply and Elasticity
Elasticity of Supply Depends on TIME◦ Supply in the short run
Business have trouble adjusting to changes in price in the short term Supply is inelastic
◦ Supply in the long run Over time, adjusts are made
Supply is more elastic
Supply and Elasticity