1.2.2 - Supply

Question 1

Def of supply

Answer 1

The number of goods and services producers are willing and able to supply at any given price, over a period of time

Question 2

5 determinate of supply

Answer 2

• changing costs of production
• technology
• indirect factors
• government policy
• other factors eg external shocks

Question 3

What happens to supply is production costs rise

Answer 3

The amount supplied will fall

Question 4

What happens if production costs fall

Answer 4

The amount supplied will rise

Question 5

How does introduction of new technology affect supply

Answer 5

Technological processes meant firms can produce in a more efficient and cost effective manner, lower production costs offers higher profits

Question 6

Def of indirect taxes

Answer 6

Are taxes that the government imposes on goods and services eg VAT

Question 7

What happens to supply when indirect tax is increased

Answer 7

Increase costs and reduce supply

Question 8

What will happen to supply when indirect taxes decrease

Answer 8

Tax rates will cut total costs and there increase supply

Question 9

How do government subsidies increase supply

Answer 9

Cuts the cost of production faced by the business, meaning that subsidies will increase supply

Question 10

How do external shocks effect supply

Answer 10

Unexpected events would lead to an increase in price of an item, meaning production costs would rise and firms reduce the amount they are willing to produce