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Supply

AP Macro - 1.5AP Micro - 1.5

Supply is the relationship between price and quantity supplied; the law of supply says as price rises, quantity supplied rises.

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Supply

The law of supply indicates that, all other things being equal:

An increase in the price of a good will decrease the quantity supplied.

An increase in the price of a good will increase the quantity supplied.

An increase in the cost of an input will increase the supply of the good.

A decrease in the price of a good will cause the supply curve to shift to the left.

Apply what you've learned with these practice questions. These questions test your understanding of the key concepts.

Which of the following would cause the supply curve for smartphones to shift to the right?

An increase in the wages of smartphone factory workers.

A decrease in the price of smartphones.

An improvement in the technology used to produce smartphones.

An expectation by sellers that smartphone prices will rise significantly next month.

An increase in taxes on smartphone producers.

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Law of supply: Price and quantity supplied are positively related; the supply curve slopes up.
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Supply shifts (input prices, technology, expectations, number of sellers) move the whole curve; a price change moves along the curve.
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Quantity supplied is one point on the curve; supply is the entire curve.