1.2.4: Supply Flashcards
What is supply?
The quantity of goods sellers can sell at a given price & time.
What causes a movement along the supply curve?
The change in price.
What is the relationship between supply and price?
A positive relationship.
What is a contraction in supply?
When price decreases and quantity decreases.
What is an extension in supply?
When price increases and quantity increases.
What causes a shift in the supply curve?
A change in the conditions of supply.
What are the conditions of supply?
•Taxes and subsidies (taxes decreases supply and subsidies increases supply).
•Costs of production (increase in production requires more investment in resources).
•Technology (leads to a fall in production costs and higher productive efficiency).
•Government legislation (high regulation increases costs and decreases supply).
