Post on 12-Apr-2017
transcript
BellringerGet out homework on demand curves, Greebes
If you turned it in, get it from the pile
D
Why do firms care?• Demand predicts revenue
• Revenue = Price X Quantity sold CookiesPrice QD*Day Revenue
$0.20 7$0.40 4$0.60 2$0.80 1$1.00 1$1.20 0
ON SlatesWhat price should this company choose if
they want to maximize revenue?
What is the minimum, per hour I would have to pay you to work at Subway?
MANKIWCHAPTER 4 ALL WEEK
Pretend there is no minimum wage and you could work for less than $7.50
Law of Supply
• As the price of a good increases, producers will produce more (,or try to) quantity. As the price of the good decreases, producers will produce less quantity.
P Q and P Q
The supply curve is always upward sloping
$
Q
S
Push ups market:
A Supply Curve
Price ofpushups
Number of pushup Sellers
1 QE2 QE3 QE4 QE5 QE
Graph on board
Graph one:
A Supply Curve
Price ofWidgets
Number of WidgetsSellers Want to
Sell$1.00 10$2.00 40$3.00 70$4.00 140
For example….• Average prices of • Therefore…..
For example….
Producer Surplus• Difference between cost and sale price• IOW: profit
• Sale: $15• Cost: $10• PS = $5
Bellringer on slatesThink back to yesterday’s push up experimentBrainstorm 3 ways we could have increased the
entire supply curve of pushups, that is, more QD at every price level
If price changes Q*supply,What changes supply?
Business clip
• What is it?• 2+ ways the entrepreneur tries to increase
his own Qs at each price level
4 Determinants of Supply
• Price of production + or -• Taxes, regulation, raw
materials, labor
4 Determinants of Supply
• Expectations• If future P$ might rise, hold inventory• If future P$ might fall, increase supply
4 Determinants of Supply• Sellers (increase or decrease)
4 Determinants of Supply• Technology
4 Determinants of SupplyMnemonic
• Price of Production• Expectations• Sellers (#)• Technology
• PEST = supply determinants
• TRIBE = demand determinants
Diff between supply and DemandXbox games
• Supply or demand change?• Determinant
Diff between supply and DemandWheat
• Supply or demand change?• Determinant
locusts
Diff between supply and DemandNew cars
• Supply or demand change?• Determinant
Diff between supply and DemandUsed clothing
• Supply or demand change?• Determinant
Diff between supply and DemandDog food
• Supply or demand change?• Determinant
Diff between supply and DemandDog food
• Supply or demand change?• Determinant
done
Diff between supply and DemandSalsa
• Supply or demand change?• Determinant
Diff between supply and DemandSalsa
• Supply or demand change?• Determinant
CLOSED
Diff between supply and Demand Salsa
• Supply or demand change?• Determinant
Diff between supply and DemandInsurance plans
• Supply or demand change?• Determinant