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    Chapter 5 Econ Summary  Supply  
Jamie Ramseyer
Mason Elias
Mr. Treadway
Period 3

Overview      Chapter 5 is about supply and how price and quantity supplied are directly related. The law of supply states that as price increases, then so does quantity supplied and as price decreases, then so does quantity supplied. This chapter also discusses the factors that can affect supply. Some of the factors that are able to affect supply are resource prices, technology, taxes, subsidies, quotas, number of sellers, future price, and sometimes weather.     
KEY TERMS   Supply- the willingness and ability of sellers to produce and offer to sell different quantities of a good at different prices during a specific time period  
Law of Supply- a law stating that as the price of a good increases, the quantity supplied of the good increases, and as the price of a good decreases, the quantity supplied of the good decreases  
Direct relationship- a relationship between two factors in which the factors move in the same direction. For example, as one factor rises, the other rises, too  
Quantity supplied- the number of units of a good produced and offered for sale at a specific price  
Supply schedule- a numerical chart illustrating the law of supply  
Supply curve- a graph that shows the amount of a good sellers are willing and able to sell at various prices  
Technology- the body of skills and knowledge concerning the use of resources in production  
Advancement in technology- the ability to produce more output with a fixed amount of resources  
Per-unit cost- the average cost of a good. For example, if $400,000 is spent to produce 100 cars, the average, or per-unit, cost is $4,000   Subsidy- a financial payment made by government for certain actions  
Quota- a legal limit on the number of units of a foreign-produced good (import) that can enter a country  
Elasticity of supply- the relationship between the percentage change in quantity supplied and the percentage change in price  
Elastic supply- the kind of supply that exists when the percentage change in quantity supplied is greater than the percentage change in price   Inelastic supply- the kind of supply that exists when the percentage change in quantity supplied is less than the percentage change in price       Comprehension/Critical Thinking and Writing    Price (in dollars) Quantity supplied (units) $0.20 20 $0.40 40 $0.60 60 $0.80 80 $1.00 100        Price (in dollars) Quantity supplied (units) $0.20 20 $0.40 40 $0.60 60 $0.80 80 $1.00 100      Price (in dollars) Quantity supplied (units) $0.20 20 $0.40 40 $0.60 60 $0.80 80 $1.00 100      Price (in dollars) Quantity supplied (units) $0.20 20 $0.40 40 $0.60 60 $0.80 80 $1.00 100               
     

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Above illustrates a company going bankrupt and no longer being able to produce Air-Treads.  Since they cannot produce any more Air-Treads, the quantity supplied stays the same no matter what the price is, therefore it is a vertical line.

Above illustrates an increase in resource prices. An increase in resource prices causes a decrease in supply because sellers are willing and able to produce and offer to sell less Air-Treads because it is more expensive to produce the Air-Tread shoe.

Above illustrates an advancement in technology and therefore the skills and knowledge make it easier to produce Air-Treads which makes it easier to sell the good.

Above illustrates an increase in taxes which causes a decrease in supply because the per-unit cost of Air-Treads increases. This extra cost of making causes a decrease in selling.

Above illustrates the government providing subsidies.  These payments cause sellers to want to produce and sell more Air-Treads because there is an extra money being provided if they sell X amount of Treads. 

        Above illustrates when the EU puts a quota on how many pairs of Air-Treads can be sold in the EU countries. Since there is a quota or restriction set, the sellers will supply less because they are only allowed to send a certain amount of pairs out of the country. 

Above illustrates the price of Air-Treads rising from $60 to $80. This causes an increase in supply becuase it follows the law of supply. This law states that as the price of a good rises, then the quantity supplied will rise, too. The reason for the rise is because the higher the price of Air-Treads bein sold, the more profit sellers will make. 

Some other factors that could affect Air-Treads are future price, the number of sellers, and the weather.  For example, if the number of sellers increases then so will the supply of Air-Treads because there are more people to sell them and vice versa.  Another example is if the future price of Air-Treads will be high, the supply would decrease in the short term and increase in the long run and vice versa.  Lastly, weather can change supply depending on the season.  For example, if it is winter then the supply for Air-Treads might decrease because people may buy winter boots instead of tennis shoes.