1.2.2 Supply Flashcards
What is the definition of supply
The quantity of goods or services that are supplied at a certain price over a time period
How does price effect supply
When the price of a good decreases the amount the firm is willing to supply increases. This is due to the profit motive
Price leads to movement along the supply curve
How does changes in he cost of production effect the supply curve
If the costs of production increases, firms will charge a higher price for the good/service.
Supply curve shifts to the left (decrease supply) as costs are high
How does the introduction of new technology effect the supply curve
New technology will make production more efficient and this means that products are made at a lower cost
This means price can be decreased meaning supply increases also due to costs being lower
How does indirect taxes effect the supply curve
If government increased tax the supply curve will shift up to the left as their is an increase in price meaning supply decreases
What is government subsidies
A monetary payment to businesses to encourage the production of goods and services
How does government sunsidies effect the supply curve
An increase in government subsidies means an increase in supply
How does external stock effect supply
Supply decreases when effected by disease, weather and pesticides
What is fixed supply
The amount supplied cannot change
