Review: movement vs. shift
The supply shifters (ROTTEN)
R — Resource costs (input prices)
O — Other goods' prices (production alternatives)
T — Technology
T — Taxes and subsidies
E — Expectations of future prices
N — Number of sellers
Graphing supply shifts
Technology improvement → supply increases (shifts right)
Higher input prices → supply decreases (shifts left)
Effect of supply shifts on equilibrium
Supply increase: price falls, quantity rises
Simultaneous shifts review
AP exam tips for 2.2
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Common mistakes
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Vocabulary
Unit 2 topics
Unit 2 overview2.1Changes in Demand2.10Tax Incidence and Deadweight Loss2.11Price Controls: Ceilings and Floors2.12International Trade and Public Policy2.2Changes in Supply2.3Price Elasticity of Demand2.4Price Elasticity of Supply2.5Cross-Price Elasticity of Demand2.6Income Elasticity of Demand2.7Consumer Surplus2.8Producer Surplus2.9Market Equilibrium and Efficiency