1.2.2 Supply

Question 1

supply

Answer 1

the quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time period

Question 2

what is the basic law of supply?

Answer 2

as the selling price of a product rises, businesses expand supply to the market
-the higher selling price acts as an incentive for businesses to produce more

Question 3

what does a rise in the market price cause?

Answer 3

an expansion of supply- producers are responding to the profit motive.

Question 4

what type of relationship is between supply and price

Answer 4

a direct relationship
-as the price increases, the quantity supplied increases
-same with decreases

Question 5

what are the four causes of changes in market supply

Answer 5

costs of production
external shocks
new technology
taxation and subsidies

Question 6

supply and costs of production

Answer 6

-lower unit costs mean that a business can supply more at each price
-higher unit costs cause an inward shift of supply

Question 7

supply and external shocks

Answer 7

unexpected changes in the external business environment usually impact the market supply

Question 8

supply and technology

Answer 8

technological change encourages new entrants to a market and can also enable existing suppliers to become more efficient, increasing their potential to supply

Question 9

supply and taxation

Answer 9

changes in taxation can affect supply and demand

Question 10

what is a subsidy?

Answer 10

any form of government support- financial or offering to producers and consumers