SupplyProfitOtherProducts

by jwietl
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SupplyProfitOtherProducts

I’m ______________________ speaking to you from Joliet Central High School, room 377 for the Institute for the Teaching of Economics in All Subject Areas. You are listening to:The Institute for the Teaching of Economics in All Subject AreasVolume Three, Issue ThreeDeterminants of Supply/Change in Profit Opportunities Producing Other ProductsThe War Production Board (WPB) was set up in January 1942 to direct the conversion of peacetime industries to those that made war goods. It quickly halted the production of hundreds of civilian consumer goods, from cars to lawn mowers. The armed forces gave out contracts and scheduled production. On February 1, 1942, after the last cars rolled off the assembly lines, workers began converting automobile factories to produce bombers. In addition to converting plants, the Ford Motor Company built a huge new factory to make B-24 Liberator bombers, using the assembly line techniques used for cars. The Willow Run plant, near Ann Arbor, Michigan, opened in 1942 and by late 1943 was building 340 planes a month.The transformation in manufacturing that took place during World War II made possible what President Franklin Roosevelt called “the great arsenal of democracy.” The contracts that industry received from the armed forces, in many cases, literally provided a blank check for industry to write in relation to the level of output that could be generated. That is, demand for the products that industry could produce, planes in particular, from the armed forces allowed industry to run as long and as hard as possible in an effort to furnish the arsenal of democracy with weapons of war.The patriotism and profit opportunity in industry during World War II soared. According to economic theory, a change in profit opportunities producing other products will cause a shift in the supply curve. As plants ramped up the production of planes and ramped down the production of cars between 1939 and 1946, the supply curve for automobiles shifted to the left. As a result, the price increased and the quantity supplied decreased.


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