The document discusses concepts related to supply and demand including: 1) The determinants of supply including price of production, expectations, number of sellers, and technology. These are summarized by the mnemonic "PEST". 2) Examples are provided of how different factors could change supply or demand for various goods such as Xbox games, wheat, new cars, used clothing, and dog food. 3) An assignment is given to formulate scenarios and graph how changes in the demand determinants summarized by "TRIBE" could impact various markets.

1. What is the minimum, per hour I would
have to pay you to work at Subway?
MANKIW
CHAPTER 4 ALL WEEK
Pretend there is no minimum wage and you could work for less than $7.50

2. 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

3. Push ups market:
A Supply Curve
Price of
pushups
Number of
pushup
Sellers
1 QE
2 QE
3 QE
4 QE
5 QE
Graph on board

4. Graph one:
A Supply Curve
Price of
Widgets
Number of
Widgets
Sellers
Want to
Sell
$1.00 10
$2.00 40
$3.00 70
$4.00 140

5. For example….
• Average prices of
• Therefore…..

6. For example….

8. Producer Surplus
• Difference between cost and sale price
• IOW: profit
• Sale: $15
• Cost: $10
• PS = $5

9. If price changes Q*supply,
What changes supply?

10. 4 Determinants of Supply
• Price of production + or -
• Taxes, regulation, raw
materials, labor

11. 4 Determinants of Supply
• Expectations
• If future P$ might rise, hold inventory
• If future P$ might fall, increase supply

12. 4 Determinants of Supply
• Sellers (increase or decrease)

13. 4 Determinants of Supply
• Technology

14. 4 Determinants of Supply
Mnemonic
• Price of Production
• Expectations
• Sellers (#)
• Technology
•PEST = supply determinants
•TRIBE = demand determinants

15. Diff between supply and Demand
Xbox games
• Supply or demand change?
• Determinant

16. Diff between supply and Demand
Wheat
• Supply or demand change?
• Determinant
locusts

17. Diff between supply and Demand
New cars
• Supply or demand change?
• Determinant

18. Diff between supply and Demand
Used clothing
• Supply or demand change?
• Determinant

19. Diff between supply and Demand
Dog food
• Supply or demand change?
• Determinant

20. Diff between supply and Demand
Dog food
• Supply or demand change?
• Determinant

21. Diff between supply and Demand
Salsa
• Supply or demand change?
• Determinant

22. Diff between supply and Demand
Salsa
• Supply or demand change?
• Determinant
CLOSED

23. Diff between supply and Demand
Salsa
• Supply or demand change?
• Determinant

24. Diff between supply and Demand
Insurance plans
• Supply or demand change?
• Determinant

25. TRIBE
Assignment due next Tuesday
For each part of the:
Formulate two scenarios and graph
For example:
Beef market
Consumers see news story about
mad cow disease