the law of supply, individual and market supply, the supply curve
the factors affecting supply – price/cost of factors of production, prices of substitutes and complements, expected future prices, number of suppliers, technology
movements along the supply curve and shifts of the supply curve
You will learn to: Examine economic issues
identify how business and governments can use information from the market
examine the nature of competition in markets characterised by oligopoly and monopoly
Apply economic skills
graph a supply curve
identify reasons why government may intervene in certain markets
Traditional economics sets out some basic premises. Let's think these through and see where they are happening in our everyday lives.
Supply is a function of input price and demand.
A business will generally supply more of a good when the market can afford a higher price.
Businesses operate in industries or geographical areas which also help determine their viability.
There are different models of competition.
The market will signal to a business if their good or service is profitable.
Not all businesses are motivated by profit.
When it is unprofitable for businesses to provide some goods and services, governments need to intervene.
What is driving the big decisions of production?
Emergent order is overtaking the production decisions of economies. See here for a quick understanding:
How does emergent behaviour look? Mindmap how it moves through to different sectors and behaviours.
What does your supply curve look like?
List the SHIFTERS of the supply curve.
Let's consider a global supply curve:
Let's follow the production of an ordinary everyday product: the T-shirt.
The supply curve is just the tip of the iceberg. The supply chains behind everything we buy vary from a straightforward grower or maker to the consumer to an incredibly complex one where the product moves through hundreds of hands. There really is a world behind everything that we need to explore to really understand the notion of supply in economics.
Reference: PLANET MONEY MAKES A T-SHIRT Episode 503: Adding Up The Cost Of The Planet Money T-Shirt In all, each shirt cost us about $12.42. We open up the books and explain how that breaks down — how much went to cotton, how much went to the workers in Bangladesh, and how much went places we would never have imagined. If you're into spoilers, here's a graph that lays out all the costs. (Note: Many of these figures are estimates. It turns out, even when you're ordering 24,470 T-shirts, people won't tell you exactly how much everything costs.)
After watching these Planet Money clips, answer these questions:
1. List 5 factors that influence the supply of T-shirts.
2. In particular, identify 3 non-price factors which influence supply.
3. Give examples for each of the four factors of production, i.e. natural resources, labour, capital and enterprise.
4. If a Bangladeshi worker receives a third of the wages of a Columbia garment worker, what prediction can you make?
5. Bangladesh’s GDP growth rate is forecast to be 8% in 2020 and the figures put it ahead of other Asian countries, including India. It could shed its 'least developed country' status in five years (Source: WEF) which means it will be moved out of the category of least developed country. How could this change Bangladesh's willingness to work at such low rates?
6. Watch the clip below and discuss how supply chains might change.
Try this quick quiz on the costs of production to check your understanding:
Share what you have learned.
Write a response in the padlet below that identifies reasons why government may intervene in certain markets Use this avocado case study to produce a sophisticated and well reasoned response. Click on the headline to read the full article.
Supply strain—how will the coronavirus affect global supply chains?
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