2) Supply - MMT

Question 1

Supply:

what is supply?

Answer 1

supply is concerned with sourcing of materials and resources from suppliers

Question 2

Supply:

what is the rule of supply?

Answer 2

the rule of supply is opposite to demand, higher prices lead to higher quantity supplied

Question 3

Supply:

supply: a change in price leads to a…

Answer 3

move along the supply curve

Question 4

Supply:

a change in the conditions of supply means a…

Answer 4

shift to a new supply curve

Question 5

Supply:

what is individual supply?

Answer 5

is the supply schedule of one firm; market supply for every firm in that particular market

Question 6

Supply:

higher prices means that we…

Answer 6

extend up along the curve

Question 7

Supply:

lower prices means that we…

Answer 7

contract back along the curve

Question 8

Supply:

an increase in supply at every price means we shift to the… ; a decrease in supply means that the curve shifts to the…

Answer 8

• right

- left

Question 9

Supply:

the change in levels of supply has been caused by…

Answer 9

a change in the conditions or determinants of supply

Question 10

Supply:

examples of a change in the conditions or determinants of supply (5 things):

Answer 10

• a change in the cost of making a product
• a change in the availability of resources
• a change in tax or subsidies
• a change in technology
• a change in the price of products in a competitive or joint supply

Question 11

Supply:

what is the main factor in affecting supply?

Answer 11

cost; if cost increases the supply will decrease; lower cost leads to higher levels of supply

Question 12

Supply:

what is an example of a change in cost of making the product?

Answer 12

• if there was a big increase in the price of cheese then at each price pizzas become less profitable; the canteen supplies fewer pizzas and more of something else (this would cause the supply curve to shift left)

Question 13

supply: what is an example of a change in the availability of resources?

Answer 13

• if the canteen was short of staff, or there were power cuts due to electricity shortages then less would be supplied at each price
• Equally, an abundance of resources would shift S to the right

Question 14

supply: what is an example of a change in tax or subsidies?

Answer 14

• if the government wanted to deter students from eating too many pizzas they might make the canteen pay them 10% of every pizza sold
• if they wanted to promote pizza as a desirable product they might subsidize it - eg pay the canteen 20p for every pizza sold

Question 15

supply: what would taxes and subsidies do to the supply curve?

Answer 15

taxes would shift supply to the left (less profit), subsidies to the right (more profit)

Question 16

supply: what is an example of a change in technology?

Answer 16

a new pizza oven allow far more pizzas to be made at once

Question 17

Supply/Demand:

what is equilibrium price?

Answer 17

Defined as the price at which demand =supply and where the price will settle, until such time as there is a change in either the conditions of demand or of supply.

Question 18

Supply:

what do you do if you have excess supply?

Answer 18

lower the price

Question 19

Supply/Demand:

how is price determined?

Answer 19

by the interaction of demand and supply

Question 20

Supply/Demand:

if the price is above equilibrium there is excess…; below equilibrium is excess…

Answer 20

supply…demand

Question 21

Supply/Demand:

excess supply brings the price…; excess demand brings the price…

Answer 21

down…up

Question 22

Supply/Demand:

in economics any given market is only… when supply equals demand, which is where the two curves cross

Answer 22

‘at rest’ (in equilibrium)