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ECON_2306 =&gt; Lecture 3 Slides

# Expectationsexpectations about the future price of a

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Unformatted text preview: o increases supply. Prices of related goods—if the price of substitute production good rises, producers might shift production toward the higherpriced good, causing a decrease in supply of the original good. Expectations—expectations about the future price of a product can cause producers to increase or decrease current supply. Number of sellers—generally, the larger the number of sellers the greater the supply. 54 Principles of Microeconomics 53 Principles of Microeconomics GRAPHING SUPPLY Price of Corn GRAPHING SUPPLY Price of Corn P \$5 4 S P CORN \$5 4 3 2 1 What if Supply Increases? 10 20 30 40 50 60 70 80 Quantity of Principles of Microeconomics Corn \$ %/ !" # * ) ' Q 55 ,( "( *" )( " Increase in Supply S S’ CORN \$ %/ !" # * Increase ) in Quantity ' Supplied Q 56 3 2 1 ,( +( "( 0( *" ,( )( #" " *( o o 10 20 30 40 50 60 70 80 Quantity of Principles of Microeconomics Corn 14 GRAPHING SUPPLY Price of Corn GRAPHING SUPPLY Price of Corn Decrease P \$5 4 S P CORN \$5 4 3 2 1 What if Supply Decreases? 10 20 30 40 50 60 70 80 Quantity of Principles of Microeconomics Corn \$ %/ !" # * ) ' Q 57 in Supply S’ S CORN \$ %/ !" # * Decrease ) in Quantity ' Supplied ,( #" "( *( *" )( )( ( " .. ,( "( *" )( " 3 2 1 o o 10 20 30 40 50 60 70 80 Quantity of Principles of Microeconomics Corn Q 58 The Supply Side of the Market Variables That Shift Supply Price Price of inputs Technological Technological change A positive or negative change in the ability of a firm firm to produce a given level of output with a given amount amount of inputs. Shifting the Supply Curve Refer Refer to the graphs below. Each graph refers to the supply for printers. Which of the graphs best describes the impact of an increase in productivity? productivity? a. The graph on the left. b. The graph on the right. c. Both graphs. d. Neither graph. graph Prices of substitutes in production production Expected Expected future prices Number of firms in the market market 59 Principles of Microeconomics Principles of Microeconomics 60 15 Refer Refer to the graphs below. Each graph refers to the supply for printers. Which of the graphs best describes the impact of an increase in productivity? productivity? a. The graph on the left. b. The graph on the right. c. Both graphs. d. Neither graph. graph The Supply Side of the Market A Change in Supply versus a Change in Quantity Supplied The Difference between a Change in Supply versus a Change in the Quantity Supplied 61 Principles of Microeconomics Principles of Microeconomics 62 DETERMINANTS DETERMINANTS OF SUPPLY SUPPLY Resource Prices Technology Taxes & Subsidies Subsidies Prices of Other Goods Price Expectations Number of Sellers 63 Principles of Microeconomics DETERMINANTS DETERMINANTS OF SUPPLY SUPPLY Resource Prices Technology Combining Taxes & Subsidies Subsidies with Prices of Other Goods Demand Price Expectations Number of Sellers 64 Principles of Microeconomics 16 MARKET MARKET DEMAND & SUP...
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