Unit 1: Supply

Shalom Akinwunmi
AP Economics
3rd Period
Supply: the quantities that producers or sellers are willing and able to produce or sell at various prices
The Law of Supply: There is a direct relationship between price and quantity supply

 What Causes a Change in the Quantity of Supply?

  • Δ in price
What Causes a Change in Supply?
  • Δ
  • In the number of sellers (producers/suppliers)
  • In the cost of production (resource prices)
  • In technology
  • In the weather
  • In taxes and subsidies
  • In expectations


Total revenue formula: Price x Quantity
Fixed cost: a cost that does not change no matter how much of a good is being produced
Variable cost: a cost that rises and falls depending upon how much is produced
Marginal cost: the cost of producing one more additional unit of a good
Marginal Revenue: New total revenue - old marginal revenue

 Important Formulas

(Q: Quantity; TC: Total Cost; TFC: Total Fixed Cost; TVC: Total Variable Cost; MC: Marginal Cost; AFC: Average Fixed Cost; AVC: Average Variable Cost; ATC: Average Total Cost)

  • TC = TFC + TVC
  • ATC = AFC + AVC
  • MC = ΔTC/ΔQ or New TC - Old TC
  • AFC = TFC/Q 
  • AVC = TVC/Q 
  • TFC = AFC × Q
  • TVC = AVC × Q
  • TC = ATC × Q
  Related image


Comments

  1. UnknownFebruary 3, 2018 at 3:56 PM

    https://youtu.be/01lKDkYSFDg
    This video really helps you understand what price ceiling and Price floor is all about its 10 min. But worth it you can zoom past unimportant parts if you like but I recommend not to.

    ReplyDelete
  2. Jaelyn S.February 6, 2018 at 7:28 AM

    This post was very informative but I would like to add that While price increases quantity increases.

    ReplyDelete

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