1.2 Supply

Question 1

What is ‘quantity supplied’?

Answer 1

The amount of a good that sellers are willing and able to sell.

• willing: a producer wants to sell that amount
• able: the amount is feasible given resources and technology

Question 2

What is the ‘law of supply’?

Answer 2

The claim that, other things being equal, the quantity supplied of a good rises when the price of the good rises.

Question 3

What does the term ‘other things equal’ mean?

Answer 3

Holding constant in all other factors (other than price) that may affect quantity demanded

Question 4

What are the two ways of representing the relationship between price and quantity supplied?

Answer 4

1. Supply Schedule

2. Supply Curve

Question 5

What is a ‘supply schedule’?

Answer 5

A table that shows the relationship between the price of the good and the quantity supplied.

Question 6

What is a ‘supply curve’?

Answer 6

A graph of the relationship between the price of a good and the quantity supplied.

Question 7

What is ‘market supply’?

Answer 7

Refers tot the sum of all individual supplies for a particular good or service

• graphically, individual supply curves are summed horizontally to obtain the market supply curve

Question 8

What happens when there is a ‘change in price’ (market supply curve)?

Answer 8

A change in price of the good generates a movement along the supply curve

• this is a change in quantity supplied

Question 9

What happen if ‘one factor is change but keep the price the same’ (market supply curve)?

Answer 9

There is a shift in the supply curve, either left or right.

• this means there is a change in supply

Question 10

What are other factors that affect supply?

Answer 10

1. Input prices
2. Technology
3. Expectations
4. Number of sellers