Supply

AS Economics

Aims and Objectives

Aim: Understand how PPB curves can shift

Level

Objectives:
Define supply Calculate market supply

E-D C-B

B-A
A*

Analyse the effects of a change in price on supply. Evaluate different factors which may influence supply

Starter
Define supply. Why does Apple supply new iPhones every 1-2 years?

Supply, Planned Supply and Actual Supply

Supply: The amount offered for sale at each given price level. Planned Supply:

The amount producers plan to produce at each given price level. Actual Supply: The amount that producers actually produce.

A Supply Curve
Price Supply P2 P1 P3

Remember your Ps and Qs!

Q3

Q1

Q2

Qty Demanded

A Supply Curve
Price Supply P2 P1 P3
As prices rise firms will try to make higher profits and supply more to the market Firms main objective is to profit maximise Positive relationship

Q3

Q1

Q2

Qty Demanded

Class Supply
Put your hand up if you would babysit my child for 4 hours for: 1 3 10 20 50

Calculating Market Supply

Price Price Price 50p D

50p

50p

0 20

0
30

0 50 Qty Demanded Qty Demanded

Qty Demanded

Individual Supply 1

Individual Supply 2

Market Supply

Supply Curve Question

1. Using the information below plot the supply curve:
Price Qty 20 40 18 35 16 30 14 25 12 20 10 15 8 10 6 5

2. If the price was expected to rise to 26 estimate the level of supply. 3. Recession hit the UK economy! At each given price level firms will now supply 23% less goods and services. Plot a new supply curve to show the effects of this on the supply curve.

Extension and Contraction in Supply

Price Supply P2 P1 P3
Extension in Supply Contraction in Supply

When price rises there is a movement along the supply curve.

Q3

Q1

Q2

Qty Demanded

Cereals, Supply and Demand

Read the case study. Find as many reasons as you can to explain the fall in price. Attempt to draw a diagram to show what has happened to cereal demand and supply.