2.4

Question 1

define supply curve

Answer 1

a diagram showing the quantities of a product supplied at a range of prices

Question 2

define supply

Answer 2

the quantity of a good or service that producers are willing and able to supply at a given price in a particular time period

Question 3

define supply schedule

Answer 3

a table that gives the quantities supplied at a range of prices

Question 4

define law of supply

Answer 4

as the price of a good or service falls, the quantity supplid decreases, and vice vers

Question 4

define extension in supply

Answer 4

an increase in the quantity supplied in response to an increase in price

Question 4

define contraction in supply

Answer 4

a decrease in the quantity supplied in response to a decrease in price

Question 5

define conditions of supply

Answer 5

factors other than the price of the good or service that lead tp a change in position of the supply curve

Question 6

define increase in supply

Answer 6

a rightward shift in the supply curve showing that a greater quantity is supplied at each price that was previously

Question 7

define decrease in supply

Answer 7

a leftward shift in the supply curve showing that a smaller quantity is supplied at each price than was previously

Question 8

state some of the non price factors that affect the cost of producing a good or service

Answer 8

• change in the cost of factors of production
• improvements in technology
• imposition of an indirect tax or subsidy
• weather conditions
• changed int eh price’s of other products
• a change in the number of suppliers to the market

Question 9

define indirect tax

Answer 9

a tax on expenditure, such as sales tax or VAT

Question 10

state some of the non price factors that increase the supply curve

Answer 10

imposition of an indirect tax or a subsidy: an increase in indirect taxes will lead to a decrease in supply. a subsidy will lead to an increase in supply

weather conditions: good weather conditions are likely to lead to a good harvest causing the supply of agricultural products to increase

Question 11

state some of the non price factors that decrease the supply curve

Answer 11

change in the cost of factors of production: an increase in wages, interest rates, and the prices of raw materials, power or rent leads to higher costs of production, so supply will decrease

changes in the prices of other products: take, for example, a farmer who produces wheat barely. if the price of wheat increases, the farmer will grow more wheat and plant fewer fields of barely, leading to decrease in supply of barely