Defying Gravity and the Law of Supply

There is probably some elasticity rule or other factor of supply curves that I haven't realized yet but I may have found something defies the law of supply.

Supply curves show that as price increases, there is more production and more quantity supplied. Supply curves slope up due to the law of diminishing returns - its harder to make more/cheaper goods after the first set of goods.

However, I had my OBOC (Off Broadway On Campus) show this weekend and we ordered shirts with a 4 colored print of "Defying Gravity" (a Wicked song). The shirts cost each person $17 and costed the producer some price to make. But here's the thing with tshirt prints. It costs MORE to make that first tshirt. After the print is made for that first shirt, the price decreases for each shirt produced - it's easier to make tshirts. This defies the law of diminishing returns.

So when the quantity supplied increases, the price actually decreases for the producer. This doesn't follow the Law Of Supply!

Again I may be missing some factor or law of elasticity, but do printed tshirts defy the law of supply and diminishing returns?

Class 31 - Supply!

Supply
Each point on the curve: the cost of producing a unit. Price increases = more production = more quantity supplied (it costs more to make more).

Supply curves slope UP!
-This is because of the law of diminishing returns - its harder to make more/cheaper to grow the first 10 acres of corn than the next 10 (more fertilizer/water)
-Other factors - other factors that have law of diminishing returns

What changes supply?
-Price of the good changes as you move along the existing supply curve. Change in supply shifts curve.

-changes in factor (input) prices
-expectations
-technology
-changes in other markets
-elasticity

Price Elasticity of Supply - How much more will I produce when the price goes up?
m = %change in quantity supplied / %change in price of good

Class 30 - Elasticity and Supply

 Income Elasticity of Demand:

%change in QD / %change in income

-how much consumption changes with income

            -income goes up, number is positive = normal good – buy more as income goes up

            -income goes up, number is negative = inferior good – buy less when income goes up

Ex. Income is $50,000 and you spend $500 on a good and M =2.

            If income increases by 20%, you spend 40% more on that good

            If change in income is $10,000, you spend $200 more on that good.

Cross Price Elasticity:

Cross price elasticity = positive = goods are substitutes

                                  = negative = goods are inferior

Pizza / burritos. Price of pizza increases = demand for burritos increases. = substitutes

SUPPLY

More money = produce more

            Cost = tied to an action (not just a thing)

                    = tied to a person

It costs more to make a bike than a table because bike resources are valued more and the people who make bikes have an easier time finding jobs. Opportunity cost of table resources are less than the bike because people bid away resources.

Quantity supplied vs law of supply:

Quantity supply = amount of good that firms are willing/able to produce at a particular price

Law of Supply = price of a good rises = sellers make more.