1.2.4 Supply Flashcards
What is Supply?
The ability and the willingness to provide a good or service at a particular price at a given moment in time
Describe the movement along the supply curve from A to B
A contraction in supply, the quantity supplied falls because of a decrease in price
Describe the movement along the supply curve from A to C
A movement from A to C is an extension in supply, the quantity supplied rises due to an increase in price
Describe the shift from S1 to S2
A shift from S1 to S2 is a decrease in supply, because fewer goods are supplied at each and every price
Describe the shift from S1 to S3
A shift from S1 to S3 is an increase in supply, as more goods are
supplied at each and every price
List some conditions of supply
- Costs of production
- Price of other goods
- Weather
- Technology
- Goals of the supplier
- Government legislation
- Taxes and Subsidies
- Producer Cartels
What causes a shift in the supply curve?
A change in any of the factors which affect supply
What factors cause a shift in the supply curve?
- Profit motivation (when price falls, it becomes less profitable to supply the product, so firms reduce output)
- Costs of production (increase in production requires move investment in resources)
- Technology (leads to a fall in production costs and higher productive efficiency)