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AP Microeconomics AMSCO Guided Notes

2.2: Supply

AP Microeconomics
AMSCO Guided Notes
2.1 Demand
2.2 Supply
2.3 Price Elasticity of Demand
2.4 Price Elasticity of Supply
2.5 Other Elasticities
2.6 Market Equilibrium and Consumer and Producer Surplus
2.7 Market Disequilibrium and Changes in Equilibrium
2.8 The Effects of Government Intervention in Markets
2.9 International Trade and Public Policy

AP Microeconomics Guided Notes

AMSCO 2.2 - Supply

Essential Questions

  1. What factors affect the supply of a good or service in a market?
I. Law of Supply

1. What is supply and what is the most important factor in determining how much a producer will supply?

2. How does profit incentivize producers to change the quantity they supply?

A. Quantity Supplied

1. What is quantity supplied and how does it differ from supply in general?

B. Marginal Cost and Quantity Supplied

1. What is marginal cost and why does it affect a producer's decision to increase quantity supplied?

2. At what point will a producer decide to continue producing a product, and what role does price play in that decision?

II. The Supply Schedule and Curve

1. What information does a supply schedule show and how is it organized?

2. How does the slope of a supply curve differ from the slope of a demand curve and what does this difference reveal about producer and consumer behavior?

III. Changes in Supply

1. What is a change in supply and how does it differ from a change in quantity supplied?

2. How did Henry Ford's assembly line innovation affect the supply of automobiles?

3. What does it mean when a supply curve shifts to the right or to the left?

A. Determinants That Influence Supply

1. How do changes in input prices affect the supply curve and the quantity supplied at each price?

2. What are examples of technological improvements that increase supply?

3. How do weather conditions affect supply in agricultural and energy industries?

4. How does an increase in the number of sellers affect the market supply curve?

5. How does a decrease in the price of a substitute product affect a producer's supply decisions?

6. What are joint products and how does a price increase in one joint product affect the supply of the other?

7. How do government policies such as tariffs and subsidies influence supply?

B. Market Supply Curve

1. What is a market supply curve and how is it calculated from individual producers?

2. How does an increase in the number of producers in a market affect the market supply curve?

Key Terms

incentive

profit

supply

law of supply

own-price

quantity supplied

marginal cost

supply schedule

supply curve

change in supply

shift in the supply curve

determinants of supply

tariffs

market supply curve