AP Macroeconomics AMSCO Guided Notes
1.5: Supply
AP Macroeconomics Guided Notes
AMSCO 1.5 - Supply
Essential Questions
- What influences the supply of goods in a competitive market?
I. The Law of Supply
1. What is supply and how does price affect the quantity supplied?
2. What does the law of supply state about the relationship between price and quantity supplied?
3. How do higher prices affect both existing producers and new market entrants?
II. Determinants of Supply
1. What are determinants of supply and why do they matter?
A. Change in Prices of Related Goods or Services
1. How do changes in prices of related goods affect a producer's supply decisions?
B. Change in Technology
1. How do technological advancements affect production costs and supply?
C. Change in Price of Resources
1. How does the cost of resources affect supply and why does this impact vary by industry?
D. Change in Number of Producers
1. How does an increase or decrease in the number of producers affect the total supply of a good?
E. Change in Expectations
1. How can producers' expectations about future prices affect their current supply decisions?
F. Change in Government Policies
1. How do government regulations and policies affect supply?
2. How do taxes and subsidies differ in their effects on supply?
G. Other Factors
1. What are examples of other factors that can affect supply?
III. Graphing Supply
A. Supply Schedule
1. What is a supply schedule and what information does it contain?
B. Supply Curve
1. How is a supply curve created from a supply schedule and what does its slope indicate?
C. Shifting the Supply Curve
1. What causes movement along a supply curve versus a shift of the entire supply curve?
2. How do changes in determinants of supply cause the supply curve to shift left or right?
D. Slope of the Supply Curve
1. What is price elasticity of supply and how does it differ between elastic and inelastic supply?
2. What are examples of goods with elastic supply and inelastic supply, and why do they differ?
Key Terms
supply
law of supply
determinants of supply
supply curve
supply schedule