1.2.2 Supply

Question 1

supply

Answer 1

no of goods/services producers are willing and able to supply at any given price over period of time

Question 2

selling price to consumer rising & falling

Answer 2

rise=quantity supplied increase
fall=quantity supplied decreases (feel not worth it )

price changes = movement along curve - direct relationship

Question 3

supply curve

Answer 3

graphical representation of relationship between quantity supplied and price for all suppliers

Question 4

link with supply and price of good

Answer 4

• higher price = cover costs = profit
• unlikely = loss in long terms
• higher prices = incentive = expand production (supply)

Question 5

5 determinants of supply

PCOGT

Answer 5

1. prices of other goods/services
2. other factors (expectations)
3. government policy (taxes/subsidies)
4. changing costs of production
5. technological progress

Question 6

changing costs of production

Answer 6

• price of imports (factors of production)
• increase = expensive supply = reduce output
• price inputs reduced = cheaper supply = supply increase
• improve tech = reduce production costs

Question 7

technology/technological progress

Answer 7

• progress = efficient/cost effective manner
• supply curve assume constant technology state
• large scale machinery =FC greater output - cpu cheaper
• technology increase = profitable to supply more

Question 8

prices of other goods/services (competitions)

Answer 8

• competition
• more firms - supply shift right = increase supply (likely in profitable markets)
• product unprofitable business leave - decrease supply

Question 9

government policy (taxes/subsidies)

Answer 9

• indirect taxes =expensive produce= quantity of supply reduced
• subsidies = cheaper to produce = supply increase

Question 10

taxation

Answer 10

charge on individuals/firms gov use taxation to finance spending

Question 11

subsidies

Answer 11

finance provided to producers = encourage to produce goods/services

Question 12

indirect tax

Answer 12

placed on goods/service produced by individuals/firms

Question 13

other factors (e.g. external shocks)

Answer 13

external shocks: unexpected events outside of business control have direct impact on supply level

• natural disasters
• terrorist attacks
• out break disease (foot&mouth/bird flu)

Question 14

6 influences on cost of production

Answer 14

1-natural disaster 
2-energy costs 
3-new technology 
4-government subsidies 
5-exchange rates 
6-VAT ( tax charged on production that you then charge consumers = dont do it if price sensitive product)

Question 15

PRICE

Answer 15

MOVEMENT
(left = decrease = contraction)
(right = increase = extension)

Question 16

DETERMINANT

Answer 16

SHIFT

Question 17

SHIFT RIGHT

Answer 17

INCREASE

Question 18

SHIFT LEFT

Answer 18

DECREASE