Copy and answer questions 1-13 on page 122-123 to review Chapter 5. Due on Friday.
Chapter 5 Supply
Section 3 Changes in Supply
Factors that will shift the supply curve:
1. Subsidies – Why?
To encourage producers to produce what the nation needs.
To protect young and growing industries from foreign competition.
By lowering the marginal cost at all levels of output, shifting the supply curve to the right. When that happens, it generally lowers the price of the good to the public.
2. Excise Tax
Often used to discourage the sale of harmful product.
Examples: Tax on tobacco and alcohol.
Tax on gas guzzlers for cars, not SUVs.
Causes the supply curve to shift to the left by increasing the price of the good.
Government intervention in a market that affects prices, quantity, or quality of a good.
Emission control on cars.
Airbags for cars.
Specially formulated gasoline for California.
4. Seller Expectations
If the sellers are expecting a rise in the price of the goods, then the seller will hold back the goods until the price has risen.
5. Changes in global economy
Increase in the wages of foreign workers.
New technological inventions.
New discovery of supply from elsewhere.