Tuesday, February 14, 2006

Supply

Here is the link for the animated gif file for the determinants of supply: http://www.reffonomics.com/determinatesofsupply.html

Some questions for you - ideas for discussion. And please feel free to answer others, too!

Post your own questions from class if you want!


1. Give one example from actual firms or industries for each of the factors that cause a change in supply.

2. Why does the supply curve slope upwards?


And some supply & demand questions:

3. If you were a seller, why would you want to limit supply - either by keeping out new market entrants or by establishing production quotas? Why would you hate that if you were a consumer?

4. If marijuana were legalized, what would happen to the supply and demand curves for the drug?

Always make sure to explain your answers! :)

21 comments:

NicolleM said...

The supply curve slopes upwards because when the price of something goes up, the quantity does as well. If the consumer had it their way it would be more quantity for less money, but the supplier wants to make a bigger profit.

forsnic said...

if marijuana was legalized; the demand would increase i would assume, price would decrease because more would be produced, there would be more suppliers, quantity supplied would increase, and supply would increase??. i think. i am still unsure about much of this stuff.

forsnic said...

very true nicolle. the consumer always gets screwed. that is why i want to be the owner of a company and return the favor. lol jk.

DrFeelGood said...

the economy wouldnt go round if it werent for the consumer getting screwed all the time. our economy relies on the stupidity of people to accept that they are screwed and buy the cheap crap at insanely high prices because the consumer thinks they need it. for example...the hummer

The Amazing O-clam said...

The curve for Whacky Tabacky would shift... The supply would skyrocket, every company that could would grow it, every drug addict would buy loads of the stuff, and the demand may go down or rise, it depends, If it is legal, many people who are just smoking to rebel would stop, but thats a load of crap, and they keep doing it cause they are addicted, not because its rebelling, no, the demand would also increase.
-Malcolm

cranjos said...

3.) If I'm the seller/producer of a certain good, I'm going to limit the supply of that good for a few reasons. If I limit the supply, the consumers are going to have a higher demand for it since there's less of it, and because the demand has risen since the supply fell, the price which I can charge is higher than if the supply was high.

DrFeelGood said...

if marijuana were to be legalized, there would be no supply and demand curve because no one would be concious enough to know what it looked like. if thair was an atemptt to maike a curve it wuld be morre of a squiggglle than a curve and nott repereesent anything... im hungry...

DrFeelGood said...

on a serious note, if marijuana were legalized the demand would increase slightly but it would seem like the demand multiplied tenfold, this would be due to the fact that before the new law, people bought the drug silently, but now can buy pot without openly and not be arrested. supply itself would not increase if no addition sellers entered the market, quantity supplied would increase along with price. assuming now that people like money and are predictably rational, more sellers would arise and supply would then shift up increasing quantity yet again but now reducing prices

helen said...

2 supply curves slope upwards because suppliers want to make as much money as possible

3 if I were a supplier, I'd want to limit supply so that I could control the price to make as much money as possible; as a consumer, this sucks because I'm paying a LOT more for a good than it costs the supplier to produce

4 I don't even want to try on this one; there are too many variables and it's making my brain hurt

cherie said...

I'm not quite sure what Lesson 3 Activity 15 Part B wants us to do so if anybody could explain it me that would be great.

jacnbox said...

ok, this isnt a comment on the questions listed, but this is an all-out cry for help! im confuddled with activity 16. its all greek to me.

as a side note, when i did activity 15, i decided to eat an apple. it was good.

freejon said...

couldnt the price for marijuana possibly go down? If marijuana was legalized, then companies could start mass producing the stuff. Then companies, like Walmart, could sell it for really cheap. I think that it would end up showing the same supply slope as cigarettes or alcohol. Alcohol was illegal at one point and remember what happened after they legalized it agian?

freejon said...

even though i probably should have been asleep by now, its 11 10pm...i started browsing the internet for a "more right" answer that ours about the legalization of drugs. i found this website and thought you guys might want to take a look. its pretty interesting i think.

http://faculty.winthrop.edu/stonebrakerr
/book/supplysidedrugs.htm

KM said...

Cherie & Jacqui - let me know if the explanation in the new post is not enough to explain the assignments. :)

Funny...it made me want apple pie...

KM said...

Jon - excellent link! Everyone - go look at it!

We haven't gotten to elasticity yet, but the basic idea of elasticity of demand means that if a good is a necessity (as it is for a drug addict), then even if the price goes sky high, they will still buy it.

Most economists would argue that demand would drop if drugs became legalized. Also, the idea of what drug pushers would do has to come into it. If it wasn't illegal, would it hold the same allure? How many 22-30 year olds get trashed as often as those underage?(the numbers might surprise you)

Jon asked me something at the beginning of class today - what happened at the end of Prohibition when liquor was readily available again? Did the demand rise? Did the price drop dramatically - was that due to supply or demand? Same issue.

What do you think?

gorman said...

#3
the seller wants to keep a limited supply to make the equilibrium price go up for each good....the seller wants more supply to make the equilibrium price go down

amepham said...

If i were a seller i would want to limit supply because we all know that the less there is of something the more people want it. It's like the Furby story you told us, you made the price whatever you wanted because people will pay to have something high in demand. So the lower the supply the higher the demand. If i were a consumer i would not like like this at all, which is probably why i never had a Furby.

amepham said...

oh and that was #3
sorry

theczyzewicz said...

3. bye keeping limiting supply, you can keep prices higher because keeping out market entrants, you are able to set the price at whatever you want. obviously consumers hate this because of the increase in prices.

4. if marijuana were legalized the number of suppliers would definitely increase, therefore shifting the supply curve to the right. The demand curve would also shift because of the change in preference, since it is now legal to smoke it, more people will be willing to smoke it.
(does this count as two posts?)

bjjames said...

AM I supposed to answer the questions? Just curious...
curve upwards because as price goes up... supply quantity goes up

marijuana legalized... supply would shift to the right becuase the demand would move right too

bjjames said...

oh...yeah...limit supply = more demand because a less common product = higher price...
actual example.... ummm... GE creates new energy saving refrigerador... new technology to make these for cheaper = increase in supply