The Supply Curve

When economists view economics from the supply side they are thinking about how a business will seek to provide an increase in quantity of goods or services to meet the increase in prices. Or in other words, the supply side attempts to give the business owner an idea of how much service or how much product to bring to market. Supply side economics attempts to avoid being short of demand while providing an indicator of how not to over produce and waste resources. By using the supply schedule a business owner learns how much to supply to market.

The supply schedule is a categorization of amount supplied in comparison with prices paid. When the consumer is willing to pay a higher price, then the business attempts to meet the need with increased supply. After all, businesses operate to make more money. So, to summarize, when customers pay higher prices, businesses provide more supply.

When economists, entrepreneurs, and business owners graph the supply schedule you have a supply curve. The supply curve gives these people an understanding of the amount of supply that is appropriate for the level of price. Simply speaking, the supply curve gives economists a better visual understanding of the supply schedule. Later, when we combine the supply curve with the demand curve you will see another purpose of these graphs with the point of equilibrium.

To apply this example let's simply take a product such as chips. If students at the high school are willing to pay higher prices for chips, then the store will provide more chips. The result is an increase in revenue for the store.

Introduction to Supply

Economists use supply to determine the quantity of goods or services that should be made available to the market for the highest return on profit. In other words, supply is a term used in economics to demonstrate an amount of available goods or services. Entrepreneurs use supply to gauge whether they should provide more or less of a given good or service to market. For example, when people start to increase their desire (demand) for a product then the savvy entrepreneur will meet that desire (demand) by increasing supply. The increased supply sells and the entrepreneur makes more money. On the other hand however, if the desire (demand) for a good or service decreases then the entrepreneur will reduce his or her levels of supply so as to avoid the risk of losing money in the market.

The law of supply states that when market price increases then so will supply; whereas when market price decreases so will supply. (Of course this law is operating under the ceteris paribus principle that was discussed earlier in the course). When applied to an example, the law of supply becomes more evident. If consumers are willing to pay higher prices for a product then businesses seek to capture that opportunity by increasing their supply. For example, if students started to buy a certain type of soda because of its popularity, the store owner will order more of that type of soda to meet the increased demand of the customers, thus increasing profit. The store owner may also increase the price since the desire (demand) to purchase this soda is high. This principle reacts differently when the same soda becomes less popular. When the business person notices that consumers are no longer interested in that soda, he or she then drops the quantity supplied and decreases the price to avoid overstocking and a loss in profit. Demand and supply are directly reliant upon each other in an economic system.

Demand Elasticity

Since demand is affected by a multitude of factors why is it that the change in price does not always relate to the same amount of change in demand? Goods and services are not always valued, in terms of their importance or necessity, the same to the consumer. Or in other words, think about the categorization of your needs and your wants. For example, if the price of a need changes you are still willing to pay for that good or service because it is essential to your survival. On the other hand, if a price changes in relation to a simple want, then your level of willingness to pay for that good or service becomes less. The demand for goods and services do not always respond the same way to price fluctuations.

Demand elasticity measures the amount of affect a price change will have on demand. When a price change does not affect the level of demand by much it is then said to be inelastic. To apply this concept let us use an example. If you need water to drink to survive you are going to pay whatever price increase to survive. In this scenario demand is said to be inelastic. There are goods and services however that do not fit in this example and are categorized separately. If the price of certain type of soft drink were to quadruple to $4.00 per 12 oz. can then demand would be greatly affected by this price change. Here we have an example of elastic demand because consumers do not need to buy that specific type of soda and it is not essential to their everyday livelihoods. To put it plainly, inelastic demand means that consumers will still buy a product even when the price increases; whereas elastic demand means that consumers will not buy that product when the price increases. Economists measure this with a formula.

Shifts of the Demand Curve

Demand is not affected exclusively by price changes. There are a multitude of other factors which will affect demand. When studying the affects of price on a demand curve, we assume that all other external factors are not changing or that they are ceteris paribus. Ceteris paribus is a latin phrase that economists use that translates to, "all other things are held constant." Or in other words all things aside from the price have not changed. In reality, however, things change in the market all of the time. For example, clothes go out of style, new soft drinks become available, old services are replaced by other services, apples spoil, and transportation costs fluctuate. As a result, the demand curve will shift based upon external factors that change the level of demand for any good or service.

Income affects levels of demand. When consumers are being paid more in a prosperous economy then more money is available to be spent on goods and services. This example helps to support the claim that demand can change outside of the price of a good or service. Another example of a factor that will shift the demand curve is consumer expectations. When consumers have expectations about a good or service then the demand curve will shift in one direction or another.

Furthermore, changes in population will similarly affect the positioning of the demand curve. Examples of changes in population can range from active consumers in a given demographic to the amount of smokers who quit because of the availability of health education materials. The consumer population can shift the demand curve.

Finally, demand curves shift because of trends and advertising. When certain fads become less popular then the demand curve will shift. In addition, advertising will also have an affect on demand. If advertising is successful then demand becomes strengthened. Either way the demand curve shifts all of the time due to factors other than pricing.

The Demand Curve

The demand curve is a graph used by business owners and economists to determine relative levels of demand. Because pricing will affect levels of demand, the demand curve demonstrates how much demand can be predicted with a given price. Below is a demand schedule. By looking at the demand schedule it is difficult to develop a basic theme about how demand is affected by price. When we graph the data however, and create a demand curve, we can ascertain a better understanding of the overall theme on how demand is affected by price changes.

American Civil Rights Struggle

Throughout the period following the Second World War, African Americans sought to acquire the rights to be treated fairly within certain regions of the United States. Even though slavery had been abolished with the Emancipation Proclamation and the 13th Amendment in the United States Constitution, the African-Americans in the United States were not on equal footing with whites, especially in the southern states. As a result, Civil Rights leaders campaigned, usually through non-violent methods, to bring recognition to the plight of African-American citizens, thus making the issue of equality a nationwide cause. African-Americans were routinely segregated against in the southern states as well as mistreated in public venues such as employment development departments and courts of law. The consequence was a long, hard-fought struggle to gain the equal rights that were promised in the famous words written by Jefferson in the Declaration of Independence in 1776: All men are created equal.

The first major issue to be contested during the Civil Rights movement in the United States was public school segregation. In certain states African-American students were not allowed to attend schools where white students were located. As a consequence, an inequality existed between schools where white students were enrolled in comparison to schools where black students were enrolled. Examples of the inequalities range from the school resources allocated to whites versus blacks and the availability of heat in colder climates for African-American students. Eventually the Supreme Court would here a case against the Board of Education. In Brown v. The Board of Education a civilian filed a suit that the stated that segregation of the public school system was unconstitutional under the 14th Amendment of the United States Constitution. The Supreme Court held, in this landmark case, that public schools must be desegregated to comply with constitutional expectations. When school districts in the South did not comply with the ruling, the federal government sent the National Guard into non-compliant cities and escorted African-American students to class in previously designated "Whites Only" schools.

Rosa Parks, an African-American woman in the South, once refused to ride in the rear part of a public bus. When she refused to ride in the designated section for African-Americans, an outcry occurred that brought attention to the segregated nature of the South ensued. As a result, citizens in the United States were made aware of simple everyday activities that were segregated in the South. After Rosa Parks' arrest and release, her gesture of defiance became a further rallying cry for equality and legislation that would grant civil liberties to all members of the United States - including African-Americans. 

One of the great leaders of the 20th Century was Dr. Martin Luther King Jr. Dr King was a leader for the civil rights movement. He advocated non-violent civil disobedience to bring attention to the cause of Civil Rights for African-Americans in the South. Although African-Americans were arrested without cause, lynched, had rights violated, and segregated from public venues, Dr. King still supported a non-violent movement. Dr. King's speeches, especially at the March on Washington D.C. for Jobs and Freedom, echoed the sentiments of the African-American population. Even though Dr. King would be assassinated, his words and prophecy became a legacy for the struggles for equality in the United States and world wide.

James Meredith being escorted to class on the University of Mississippi

By 1964 the United States government was ready to act to defend the rights of African-Americans and other minorities. The Civil Rights Act of 1964 made it illegal to discriminate against any person based upon ethnicity, sex, nation of origin, or religion. Schools were made to be desegregated. Furthermore, voting opportunities could no longer be tampered with. This legislation was landmark in that changed the ways in which citizens in the United States were treated. Although, the Civil Rights era produced legislation there is still work to be done today.

  

The Vietnam War

The Vietnam War occurred between the 1950's and the 1970's in Southeast Asia. Similar in some respects to the Korean War, the Vietnam War was a conflict between Communist forces from the northern part of the country and democratically aligned forces from the southern part of the country. Again, this conflict included the usual Cold War supporters i.e. the United States, Soviet Union, and China. To be more specific, the United States supported the southern democratic forces; whereas the Soviet Union and Chinese assisted the northern Vietnamese communists.

In its earliest phases the Vietnam War began as a conflict between French colonial forces in Indochina or southeast Asia and the communist insurgents. By the early 1960's, after the French lost control, the United States began to commit support troops to help the fledgling South Vietnam government. With increasing instability, the United States had inserted 100,000's of combat troops across southern Vietnam. The selective service (draft), the television coverage, and the peace movement made the Vietnam War extremely unpopular in the United States. By the early 1970's the United States could not win the war, thus withdrawing and ending the conflict. The Vietnam War was arguably the only war that the United States lost.

The Vietnam War was another Cold War conflict. The United States viewed the collapse of the South Vietnamese government as a communist threat. Because of the Domino Theory the United States felt compelled to combat communism on every front. The United States lost approximately 50,000 lives in the Vietnam war. The Vietnamese lost several hundreds of thousands to millions of lives in the war. The Vietnam War caused American citizens to rethink the role of their government in foreign policy.