Module Supply and Demand: Supply and Equilibrium KRUGMAN'S MACROECONOMICS for AP* 6 Margaret Ray and David Anderson

What you will learn in this Module : What the supply curve is The difference between movements along the supply curve and changes in supply The factors that shift the supply curve How supply and demand curves determine a market's equilibrium price and equilibrium quantity In the case of a shortage or surplus, how price moves the market back to equilibrium

The Supply Schedule and the Supply Curve Supply schedule= amounts of a product a producer is willing and able to produce and sell at each of a series of possible prices during a specified time period. Quantity supplied=The Actual amount of good of service producers will supply at different prices Supply Curve=Shows the relationship between supplied and price Law of supply= Direct relationship. Prices Go up the amount of Supplied goes up

Supply Schedule and Supply Curve PriceQuantity $ 822 $ 714 $ 68 $ 56 $ 45 $ 34 $ 23 Quantity Price

Understanding Shifts of the Supply Curve Increase = right, decrease = left T.R.I.C.E. shifts supply Technology Related prices (complements in production, substitutes in production) Input (Resource) prices Competition (number of producers) Expectations

Price Change: only changes the quantity supplied (Movement along the curve) The Shifters Change the Supply (This Moves the entire curve)

Equilibrium Equilibrium price Equilibrium quantity Market-clearing price Supply, Demand, and Equilibrium

Finding the Equilibrium Price and Quantity equilibrium E price equilibrium quantity

Why Does the Market Price Fall If It Is Above the Equilibrium Price? Surplus Producer's Incentive

Why Does the Market Price Rise If It is Below the Equilibrium Price? Shortage Consumer's Incentive The tendency towards equilibrium