1.2.4 - supply Flashcards
What is supply?
The quantity of a good or service that a producer is willing and able to supply at a given price.
What is joint supply?
Supply for a product that is directly and positively related to the market supply of a related product.
What does quantity supplied represent?
It represents how many of an item a producer will supply at a specific price, affected by price factors.
What does the law of supply state?
There is a direct relationship between price and quantity supplied.
What is the profit motive in relation to supply?
If the price of a good increases, there is more potential for profit, incentivizing production and increasing supply.
How do new entrants to the market affect supply?
Higher prices signal more entrants to enter the market, increasing supply.
How do production costs affect supply?
Increased production leads to higher production costs, which are passed on to price to cover the cost
What causes movements along the supply curve?
Changes in price cause movements along the supply curve.
What is a contraction of supply?
A contraction of supply occurs due to a decrease in price.
What is an extension of supply?
An extension of supply occurs due to an increase in price.
What causes shifts along the supply curve?
Shifts along the supply curve are caused by changes in factors that affect supply, known as the conditions of supply.
How do changes in costs of production affect supply?
If company costs exceed the selling price, prices increase to avoid losses, so less is supplied at each price.
How does production capacity affect supply?
An increased production capacity increase supply as efficient production
How does the price of other goods affect supply?
Production of one good automatically causes the production of another good.
How does weather affect supply?
Weather can impact supply, particularly in agriculture or industries reliant on natural resources.
