• Learning Objective:
–Today I will be able to determine what
shifts the supply curve by providing
examples of what shifts the supply curve.
• Agenda
1. Learning Objective
2. Tesla vs. Edison
3. Lecture: Ch. 5.2 Shifts of the Supply Curve
4. Exit Slip
5. Vocab. Ch. 5
CONTEMPORARY ECONOMICS:
LESSON 5.2
1
American Genius: Tesla vs. Edison
1. Identify how are Tesla & Edison different
from each other? How are they similar?
– (besides both trying to invent electricity)
2. What potential do the suppliers, investors, or
inventors see in electricity?
3. How would you say that the supply curve was
affected?
4. Determine what would have happened if
Tesla & Edison never came across each
other?
CONTEMPORARY ECONOMICS:
LESSON 5.2
2
Title Notes:
Ch. 5.2 Shifts of the Supply Curve
• Five determinants of market
supply
(other than the price of the good)
1. Cost of resources used to make the good
2. Price of other goods these resources
could make
3. Technology used to make the good
4. Producer expectations
5. Number of sellers in the market
CONTEMPORARY ECONOMICS:
LESSON 5.2
3
1. Changes in the Price of Resources
• Any change in the costs of resources:
– As cost of producing decreases, suppliers are more
willing & able to supply
– As cost of producing increases, suppliers are less
willing & able to supply
– Ex. Price on cheese lowers, therefore, BJ’s is more
willing/able to make mozzarella sticks.
CONTEMPORARY ECONOMICS:
LESSON 5.2
4
2. Changes in the Prices Other Goods
• A change in the price of a good can
increase or decrease opportunity
cost of making a related good
produced from the same
productive resources.
– Ex.
• Mozzarella cheese is the Resource
• Price on mozzarella sticks lowers
• As the price of pizza stays,
opportunity cost of making pizza
decreases.
• Better off making more pizza now
that price on mozzarella sticks
lowered.
CONTEMPORARY ECONOMICS:
LESSON 5.2
5
3. Changes in Technology
• Discoveries in
chemistry, biology,
electronics, and many
other fields have
created new
products, improved
existing products, and
lowered the cost of
production.
CONTEMPORARY ECONOMICS:
LESSON 5.2
6
4. Changes in Producer Expectations
• Any change that
affects producer
expectations about
profitability can affect
market supply.
• An expectation of higher prices in
the future could either increase
or decrease current supply,
depending on the good
CONTEMPORARY ECONOMICS:
LESSON 5.2
7
5. Changes in the Number of Sellers in
the Market
• Government
regulations may
influence market
supply.
• Any government action that
affects a market’s profitability,
such as a change in business
taxes, could shift the supply
curve.
CONTEMPORARY ECONOMICS:
LESSON 5.2
8
An Increase in the
Market Supply for Pizza
S
$15
S'
Price per pizza
g
12
h
9
6
3
0
12 16 20 24 28
Millions of pizzas per week
CONTEMPORARY ECONOMICS:
LESSON 5.2
9
An Decrease in the
Market Supply for Pizza
S''
Price per pizza
$15
12
i
S
g
9
6
3
0
12 16 20 24 28
Millions of pizzas per week
CONTEMPORARY ECONOMICS:
LESSON 5.2
10
Checking for Understanding
What are the five determinants of supply,
and how do changes in each effect the
supply of a good?
1. Cost of resources used to make the good –
An increase in the cost of resources this will shift the supply curve
inward
2. Price of other goods these resources could make –
An increase in this will shift the supply curve inward
3. Technology used to make the good –
An increase in this will shift the supply curve outward
4. Producer expectations –
An increase in this will shift the supply curve outward
5. Number of sellers in the market –
CONTEMPORARY ECONOMICS:
11
An increase in this will shift the
supply
curve outward
LESSON
3.3
Movements Along a Supply Curve
VS. Shifts of a Supply Curve
• A change in price, other things
constant, causes a movement along a
supply curve from one price-quantity
combination to another.
• A change in one of the determinants
of supply other than the price causes
a shift of a supply curve, changing
supply.
CONTEMPORARY ECONOMICS:
LESSON 5.2
12
Checking for Understanding
Explain the difference between a
movement along a supply curve and a
shift of a supply curve.
A change in price, other things constant, causes a
movement along a supply curve from one pricequantity combination to another.
A change in one of the determinants of supply other
than the price causes a shift of a supply curve,
changing supply.
CONTEMPORARY ECONOMICS:
LESSON 3.3
13
Exit Slip
• Identify an invention from many
years ago, or more recent, that
has changed the way some
people live. Then, explain how
one of the determinants has
changed the supply curve on
that invention.
CONTEMPORARY ECONOMICS:
LESSON 5.2
14
High Profits: Caitlin’s Law
1. What are some necessary changes?
2. What are some future expectations the
owners have regarding their shop?
3. How might the current situation of the shop
change the supply of the shop?
CONTEMPORARY ECONOMICS:
LESSON 5.2
15