Supply Changes

Think about your fictitious business from your project as you read "Economics & You: Input Costs" on page 124.

• What main resources/products (cotton, gasoline, steel, fabric, etc.) does your business rely on?
  
   For example, if you sell t-shirts, the manufacturer would need cloth -- or if you are making shoes you might need leather or rubber -- or if you are a lawn care company, you might need gasoline.
• What resources do your main products require before they get to you?  For example, to create cloth a company must have cotton -- and to have cotton they would need water and fertilizer and seeds and labor.
• What changes in costs for supplies would make you [in your specific business] charge more for your product/service?  Why?
• How might technology be used to reduce costs for your business?
• If one of your main supply necessities (i.e. cotton or gasoline) was owned by one or two companies, what might happen to the price of that resource?  Why?

Answer the following questions:

• Explain what Subsidies are (p.124) in your own words.
• Read the "Ballooning Problem" article about reduced supplies and increased demand.  
• How might government regulation change how helium is used?
• How is helium becoming a shortage instead of a scarce resource?
• Suppose the United States buys most of its bananas from a particular country.  If that country suffered a drought, what would happen to the "supply curve" for bananas?
• If regulation increases price and decreases supply, why does the government issue regulations?
• Why would an auto-maker want to have manufacturing plants in several different regions?
• Why would a software company NOT necessarily want facilities in several different regions?
• Suppose television networks raise the fees that cable television networks must pay to show their programs.  What processes or prices might change?
• Suppose that you open a shoe repair shop.  What fixed and variable costs would you have?

Videos about Helium Shortage:

AP Macro: