2.3 Supply

Question 1

What is the definition of supply ?

Answer 1

supply - the quantity that sellers are willing and able to sell at a given price in a given period of time

Question 2

What is supply in a labour market ?

Answer 2

In the labour market - supply is the quantity of worker hours that workers are willing and able to sell (work) at a given wage over a given period of time

Question 3

What is the law of supply ?

Answer 3

The law of supply - quantity supplied will usually increase as price increases and quantity supplied will fall when price falls, Ceteris Paribus.

Question 4

What makes up the supply function ?

Answer 4

The supply function for a good/service depends on:
- cost of labour
- cost of raw materials
- cost of capital(interest)
- expected minimum profit
- costs of indirect taxes
- subsidies available
- expectations of future price
- time
- competitive supply

Question 5

What is PES ?

Answer 5

Question 6

What is a contraction and extension of supply ?

Answer 6

Question 7

What is the producer substitution effect ?

Answer 7

• the effect of a change in price on quantity supplied arising from the producer switching to, or from producing substitute products with the factors of production at their disposable as a result of a change in price.