AP Macroeconomics - Unit 1: Supply
Multiple Choice
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11 Terms
Supply
A producer's willingness and ability to sell a good or service
“Quantity Supplied” is determined by the ________ of an item sold.
Price
Law of Supply: Price
The price and the quantity supplied are directly related
Marginal Cost
It is more costly to produce a larger quantity than a smaller quantity
Causes of Supply Changes: "N” in NICEJAG
Natural or Manmade Phenomenon: natural disasters, riots, weather, etc.
Causes of Supply Changes: “I” in NICEJAG
Input Costs: prices of new materials or factors of production
Causes of Supply Changes: “C” in NICEJAG
Competition: the number of producers in the market (more competition correlates to more supply)
Causes of Supply Changes: “E” in NICEJAG
Expected Prices: if producers expect rising prices in the future then supply DECREASES now, and if producers expect lower prices in the future then supply INCREASES now
Causes of Supply Changes: “J” in NICEJAG
Joint Supply Profit: by-products and products that go together increase and decrease together
Causes of Supply Changes: “A” in NICEJAG
Alternative Goods Profit: opportunity cost will determine what is supplied more
Causes of Supply Changes: “G” in NICEJAG
Government Action: business taxes, regulations, and subsidies
