Amplitude modulation, commonly abbreviated as AM, is a very common
way of modulating a signal for transmission. It is only slightly more
complicated than double-sideband modulation, but is easier to
implement in hardware. The major disadvantage of AM is that is
inefficient. Since AM demodulation is easy and cheap to implement, it
becomes possible to mass produce inexpensive receivers, such as the
common radio. So although radio stations have to put a lot of power
into transmitting a signal, a large audience is ready to receive it,
making it cost effective.
AM works by adding a dc bias to the message signal, and
then multiplying that by a carrier signal. The purpose of the dc bias
is to raise the minimum value of the message signal above zero, any
part of the message signal that is negative will be distorted when the
signal is demodulated. The message signal becomes an envelope for the
carrier signal, in that when the message and the carrier signals are
multiplied, the message signal determines the amplitude of the
carrier.
Demodulation is achieved by removing the positive or negative side
of the transmitted signal, and then a low pass filter is applied to
remove the carrier. Finally, the signal is shifted by a dc bias, and
the message signal is recovered.