Speaker 1 (00:00):

Hey, how youdoing econ students? This mr. Clifford, welcome to AC DC econ. In the last video. We talked
about demand using milk, and this video, I'm going totalk about Supply using Dairy Farmers, Paul. This is just
stupid. Why are we doing this? I look more like a cowboy than I.Do a Dairy Farmer. Actually, a Cowboys
would have Dairy Farmers should be called Cowboy the way. We know him should be called ahorse. Boy in
Dallas horse, boys has apretty nice ring to it. Now, there's one thing I know about its Dairy Farmer,

Speaker 1 (00:31):
just joking. I don't know anything about thearea, but I do know about Supply and the law of supply, the law
ofsupply says, there's adirect relationship between price and the quantity supplied. When the price increases for
milk, that's going to increase the quantity of milk produced. This is because an increase in the price gives
anincentive for Dairy Farmers to produce more because theywant tomake more profits. So a supply curve is
upward sloping when the price increases, the quantity supplied increases. And again, when there's a change in
price, Ice that moves along the supply curve, but the supply curve can also shift just like, man, an increase in
Supply is always to the, right? And a decrease is always to the left.

Speaker 1 (01:08):
Using milk is our example, let's talk about the five shifters of Supply, man, it just film this after drinking all that
milk. Oh boy, the first one is a change in the price of inputs or resource. So if there was a huge increase in the
price of dairy cows, that would cause the supply of milk to decrease in, Cows that produce milk an increase in
the price of that.

Speaker 1 (01:31):
Key resource means we be producing less milk. The second shifter is number of producers, so if Idon't know
where there's an increase, the number of Dairy Farmers, that would increase the supply of milk. The third,
shifters a change in technology that would affect productivity. So, new Advanced milking machines, would
cause these supply, for milk to increase in shift tothe right, another shifter is government. Involvement, such as
taxes or subsidies, a subsidy is on the government wants firms, the produce more sothey give them money to
produce more output. This would cause the supply curve to shift to the right attacks is just the opposite.

Speaker 1 (02:01):
This would take away producers money and since they don't have money to produce stuff, the supply would
shift tothe left and decrease and the fifth and last shifter is future expectations. If a producer thinks that canmake
more profit on their products. A few weeks from now, they'll hold back Supply now and then Supply more later
on. So here's aquestion for you, what happens to supply when the price increases G that milk? Nothing
remember a change in price. Only affects quantity Supply.

Speaker 1 (02:32):
The supply is not going tochange. Remember a change in price moves along the supply curve and achange in
something else. One ofthe five, shifters will cause the actual supply curve to change. Well, that mr. Clifford
really, helps me understand these economic Concepts. All right, now we finally have enough information to put
supply and demand together over here. We have the demand schedule and demand curve from the market. We
talked about in the previous video the market for milk. Remember demand. Goes to the dirt right here. We have
the supply curve from milk. We talked about in this video, and of course, Supply goes up to thesky, but
theycome together and they set the market equilibrium price and quantity,

Speaker 1 (03:08):
sometimes called the market clearing price. Andquantity. Three dollars isthe one spot with aquiet man. It exactly
equals the quantity Supply again that's called equilibrium, but what if we're at disequilibrium? What if the price
is way up here at $5? The quite aman is only going to be 10 gallons, right? When theprice goes up. People don't
want tobuy as much milk, but when price goes up, Producers want toproduce more milk and the quantity.
Supplied is gonna be right here at 50 gallons of milk.

Speaker 1 (03:33):
The result is going tobe something called a surplus. Its a surplus. Is when the quantity supplied is greater than
the quantity demanded and how much is the quantity of the Surplus? Well, inthis case, it's 40 gallons of milk.
It's the 50 gallons of milk thatwere produced - the 10 gallons or actually bought down unless there's some sort
ofgovernment involvement orsomething else. Weird. Happy in this market, a surplus is going to eventually fix
itself if producers are producing all this milk. But no one's buying atthat high price. Ice? What other producers
going to do? Well, we can put all themilk on sale.
Speaker 1 (04:01):
They are lower it down to the equilibrium price but what if price fell even further than that? And it fell down to
$1. Sowhat alow price consumers want to buy 80, gallons of milk but producers don't want toproduce very
much, right? They only going toproduce 10, gallons of milk. And this creates a shortage, a shortage is when The
Quiet Man in is greater than the quantity Supply and how much is the shortage in this situation. Well, it's 70
gallons quiet Bandit of 80 minus the 10 quantity Supply and again, unless Something weird is happening in this
market, the short Edge is going to fix itself.

Speaker 1 (04:31):
Now, up tothis point, we've only talked about how a change in price will move along the demand oralong the
supply curve. The next video is going to talk about the entire demand curve or supply, curve shifting, which will
change the price and the quantity. Make sure to check out that video and other videos explaining thesupply and
demand curve. All right till next time