AP Economics September 15, Review Demand 2. Begin Supply

Lesson 1-5 Supply  Your whole life you’ve been a buyer…  Supply: Amount producers are willing and able to sell at a given price.  Displayed as a schedule or curve  Individual or market  Law of Supply: All other factors equal, as price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.  P↑, Qs↑  P↓, Qs↓  DIFFERENCE BETWEEN S AND Qs!!!

The Supply Curve LO Price (per bushel) Quantity supplied (bushels per week) S Supply of Corn Price per Bushel Q s per Week $ P Q 3-3

Determinants of Supply Supply Shifters 1. Change in resource/input prices 2. Change in technology 3. Change in the number of sellers 4. Change in taxes (cost) and subsidies (benefit) 5. Change in prices of other goods 6. Change in producer expectations  Most of these determinants relate to the COST OF PRODUCING  Any factor that increases costs decreases supply and vice versa.

Producer Surplus  The difference between the amount that a producer of a good receives and the minimum amount that he would be willing to accept for the good.  Surplus amount is benefit seller receives for selling good in marketplace.