1.2.2 Supply

Question 1

Define supply

Answer 1

Supply is measured in terms of the quantity of a good or service that a producer is willing and able to make available on the market, at a given price, over a given period of time.

Question 2

How does price effect supply?

Answer 2

As a price paid by customers increases on a product or service, normally, a business will want to supply more, in anticipation of higher profits.

Question 3

What are the 5 non-price factors that effect supply?

Answer 3

1. )Cost of production
2. )Introduction of new technology
3. )Indirect taxes (e.g. VAT)
4. )Government subsidies
5. )External shocks

Question 4

What 2 factors determine supply?

Answer 4

• Price

- Non-price