2.3 - Supply Flashcards
What is Supply?
The quantity of a good or service that producers are willing and able to produce at a given price in a given period of time.
What is Joint Supply?
Where a firm produces more than one good or service together
often because one product is a byproduct of another or simply because the production process leads to more than one product - e.g. cattle famer produces beef and milk
What is Composite Supply?
Where a product produced by a firm serves more than one market.
What is Competitive Supply?
A situation where a firm has alternative uses for the factors of production to produce alternative products and must decide what to produce
What is individual supply?
The supply that a producer is willing and able to sell at a given
price in a given period of time.
What is market supply?
The sum of all individual supplies in a market.
Why are supply curves upwards sloping?
If price increases, it is more profitable for firms to supply the good, so supply increases.
High prices encourage new firms to enter the market, because it seems profitable, so supply increases.
With larger outputs, firm’s costs increase, so they need to charge a higher price to cover the costs
Only what can cause movements along a supply curve?
Only changes in price will cause these movements along the supply curve.
What stays the same when the supply curve shifts?
The price.
What is the supply curve ?
What does it represent` ?
Relationship between the price of a product and the quantity supplied by businesses
The SC represents the amount supplied by firms and their willingness to sell at given prices over a certain period of time ……in other words it shows the relationship between the quantity that businesses supply and the price of a product
Curve always slopes upwards
What is extension of supply and contraction of supply ?
Extension = an increase in the quantity supplied
Contraction = a decrease in the quantity supplied
What would cause a shift outward in the Supply Curve
What would cause a shift inward in the Supply Curve
Outward = increase in supply so that there is an increase in quantity supplied at every price
Inward = decrease in supply so that there is an decrease in quantity supplied at every price
What are the factors that cause a shift in the supply curve ?
Cost of Labour Cost of Capital Cost of Land Technology Prices of jointly supplied products Prices of competitively supplied products Taxation Subsidies
Page 32
