A. Supply Curve for Pizza
Explanation

Step 1. Draw a supply curve for pizza and pick a quantity, Q₀. A vertical line up from Q₀ to the supply curve shows the price the firm chooses, P₀.

Step 2. Why that price? Think of it as two parts: the cost of production at the margin (ingredients, the oven, rent, wages) plus the firm's desired profit. Added together they give the price the firm wishes to charge, so Q₀ and P₀ are one point on the firm's supply curve.

Step 3. Now suppose the cost of production rises, say cheese by $0.75 per pizza. The firm wants to raise its price by that same amount, so the new point sits directly above the old one, $0.75 higher, at P₁.

Step 4. Shift the supply curve through that point. An increase in cost causes an upward (or leftward) shift of supply, from S to S': at any price the quantity supplied is smaller. Use the display options to step through the four figures, and the sliders to change the cost increase or the desired profit.

Firm's Pricing
Price Breakdown
\( P = \text{Cost of production} + \text{Desired profit} \)