Supply - AP Macroeconomics

What causes a shift in the supply curve?

Changes in production costs, technology, or number of sellers. Non-price factors that affect producers' willingness to supply.
What does a rightward shift in the supply curve indicate?

Increase in supply. Rightward movement shows more quantity supplied at each price.
What is the equilibrium price?

Price where quantity supplied equals quantity demanded. Market clearing price where supply and demand balance.
What is the effect on supply if government imposes a quota?

Supply decreases. Quotas legally limit maximum quantity that can be supplied.
Identify the effect of an increase in input prices on supply.

Supply decreases. Higher input costs raise production expenses, reducing supply.
Identify the result of a supply curve shift due to a new tax.

Leftward shift. Taxes increase production costs, shifting supply left.
What is the law of supply?

As price increases, quantity supplied increases. This describes the positive relationship between price and quantity supplied.
Identify the impact of improved production technology on supply.

Supply increases. Technology reduces costs, enabling greater supply.
What is the short-run effect of a natural disaster on supply?

Supply decreases. Disasters disrupt production, reducing available supply.
What is the effect of a decrease in production costs on supply?

Supply increases. Lower costs enable producers to supply more.
What happens to the supply curve with increased government regulations?

Supply curve shifts left. Regulations increase costs, reducing supply at each price.
What is an example of a non-price determinant of supply?

Technology. Non-price factor that can shift the supply curve.
Which factor does not shift the supply curve: technology, income, input costs?

Income. Income affects demand, not supply of goods.
State the formula for elasticity of supply.

$E_s = \frac{\% \Delta Q_s}{\% \Delta P}$ . Measures responsiveness of quantity supplied to price changes.
What does an upward movement along the supply curve represent?

Increase in quantity supplied due to a price increase. Movement along curve shows price-quantity relationship.
What is the effect of increased sellers in a market?

Supply increases. More sellers add to total market supply.
What is the result of increased productivity on supply?

Supply curve shifts right. Higher productivity lowers per-unit costs, increasing supply.
Define marginal cost.

The cost of producing one additional unit of output. The additional expense of producing one more unit.
What does a perfectly inelastic supply curve look like?

Vertical line. Zero elasticity means supply doesn't respond to price changes.
Which way does the supply curve shift with a subsidy removal?

Leftward. Removing subsidies increases costs, reducing supply.
What is producer surplus?

Difference between market price and minimum price producers accept. Area above supply curve and below market price.
Define market supply.

The total quantity supplied by all producers at each price. Sum of individual producer supplies at each price level.
What is a supply curve?

A graph showing quantity supplied at each price. Visual representation of the price-quantity supplied relationship.
What is the impact of a decrease in the number of producers?

Supply decreases. Fewer producers means less total market supply.
What is the effect of a tax on supply?

Supply decreases. Taxes increase production costs, discouraging supply.
Identify the slope of a typical supply curve.

Upward sloping from left to right. Reflects the positive relationship between price and quantity supplied.
Define technological improvement in terms of supply.

Advancements that increase supply by reducing costs. Lower costs enable producers to supply more at each price.
What is the effect of innovation in production methods on supply?

Supply increases. Innovation reduces costs, enabling increased production.
What does a leftward shift in the supply curve indicate?

Decrease in supply. Leftward movement shows less quantity supplied at each price.
What occurs when there is a surplus in the market?

Quantity supplied exceeds quantity demanded. Excess supply creates downward pressure on price.
Define supply schedule.

A table showing quantity supplied at different prices. Shows the relationship between price levels and corresponding quantities supplied.
What is the effect of a subsidy on supply?

Supply increases. Subsidies reduce production costs, encouraging more supply.
Identify a scenario when the supply curve does not shift.

Change in price of the good itself. Price changes cause movement along, not shifts of, the curve.
What happens to supply if future prices are expected to rise?

Current supply decreases. Producers hold back current supply to sell later at higher prices.
Define variable costs in production.

Costs that change with the level of output. Expenses that vary directly with production level.
Define diminishing marginal returns.

Decrease in additional output with increased input beyond a point. Explains why supply curves slope upward at higher quantities.
What does a perfectly elastic supply curve look like?

Horizontal line. Infinite elasticity means any price change causes infinite supply response.
Identify the effect of a price ceiling below equilibrium on supply.

Supply decreases. Below-equilibrium ceiling reduces incentive to supply.
Determine the effect of an increase in wages on supply.

Supply decreases. Higher wages increase production costs, reducing supply.

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