2020-06-29
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Answering WHY questions: Speak up your mind.
1. Why do producers supply greater quantities of a good or a service when prices rise?
2. Why is the price of inputs needed to make a product affect the supply of this product?
3. Why can taxes influence supply?
4. Why does the improvement in technology increase supply?
5. Why is it important for business owners to understand the law of diminishing returns?
Critical thinking (Discussion competency): Discuss the following questions in groups/pairs.
(1) Write down your opinion in note form;
(2) Prepare for discussion: revise the speech formulas.
1. Why are iPods so much more common now than they were five years ago?
2. If you start with 12 workers and hire 6 more, by how many units will your additional output decrease?
3. What would happen to the price of computer chips if a company opened a new manufacturing plant that produced billions of chips?
4. Why do higher prices encourage more competitors to enter an industry? Explain your answer in terms of risk and profit.
Making generalizations: How does profit incentive affect sellers’ actions in the market? Give facts that support your statement.
Exploring issues: What would happen to the supply of high-performance tires in the following situations:
a) The cost of rubber – an important raw material used in the making of tires - increases;
b) Several new businesses enter the high-performance tire market;
c) Government imposes a tax on automobile parts – including tires;
d) New technology increases efficiency in the tire-making process.
Reviewing: Watch video “The Law of Supply”. Have you learnt anything new about the relationship between price and quantity supplied? Answer the following questions:
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1. How can relationship between price and quantity supplied be graphed?
2. Can we call the law of supply a theoretical concept? Why?
3. Can external factors change the quantity supplied? What are these factors?
Making inferences: Use the cause-and-effect diagram below to summarize what you’ve read and watched. Think about how the supply curve is affected by the following determinants of supply.
| Price of inputs goes down à | à |
| Number of firms in the industry increases à | à |
| Taxes go up à | à |
| Technology improves à | à |
Synthesizing Information: Imagine that you produce baseball caps and distribute
them to local stores. Create a graph showing the various prices and quantities supplied for your caps.
Applying information:
A supply curve is a graphical depiction of the law of supply. It shows the relationship between price and quantity supplied. A supply curve shows the quantities that producers are willing to supply at each possible price. The curve slopes upward from left to right.
Study the graph and answer the questions:
1. How many goods will be supplied at a price of (a) $60 and (b) $80 each?
2. Why does the supply curve slope upwards?
List one way that the supply curve is similar to the demand curve and one way that it is different.
Same: _____________________________________________________________
Different:__________________________________________________________
Predicting: Is there a price at which quantity supplied and quantity demanded are the same? Yes, and it is called the equilibrium price. You find it by plotting both the supply curve and the demand curve on one graph to see at which price the two lines intersect.
Any changes in either demand or supply affect the equilibrium price. Predict whether the equilibrium price would rise or fall
a) If supply increases or if the supply curve shifts to the right;
b) If supply decreases or if the supply curve shifts to the left.
Enjoying comprehension competency focus:
