251Ch3lecture6Notes

251Ch3lecture6Notes - Lecture 6 Changes in supply 5...

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8/29/2011 1 1 Chapter 3: Demand and Supply Lecture 6: Shifts in supply Ch3: Demand and Supply Lecture 6: Changes in supply 2 Changes in Supply Supply ↑: Shift to right Supply ↓: Shift to left P Q P Q S’ S S’ S “change in quantity supplied” 3 Changes in Supply 1. Input prices ▪ ↑ wages paid to labor → ↓ Supply (shift to left ) ▪ ↓ wages paid to labor → ↑ Supply (shift to right ) 2. Prices of related goods in production Substitutes in production= goods that can be produced using the same resources Ch3: Demand and Supply Lecture 6: Changes in supply 4 Substitutes in production ▪Substitutes in production ▪ Ex) Corn and Soybeans ▪ ↑ price of soybeans increases the opportunity cost of growing corn and reduces the supply of corn Ch3: Demand and Supply
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Unformatted text preview: Lecture 6: Changes in supply 5 Complements in production ▪Complements in production= Goods that must be produced together (by-products) ▪Ex) beef and leather ▪↑ price of beef increases the supply of leather Ch3: Demand and Supply Lecture 6: Changes in supply 6 Expectations and # Suppliers 3. Expectations ▪ Price expect price to rise → ↓ current supply expect price to fall → ↑ current supply 4. Number of suppliers more sellers → ↑ S fewer sellers → ↓ S Ch3: Demand and Supply Lecture 6: Changes in supply 8/29/2011 2 7 Technology 5. Technology ▪ Changes in marginal cost of production ▪ ↓ costs → ↑ supply Ch3: Demand and Supply Lecture 6: Changes in supply...
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251Ch3lecture6Notes - Lecture 6 Changes in supply 5...

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