3.1.7-3.1.9 the law of supply

Question 1

the law of supply

Answer 1

as price increases, quantity supplied increase.

as price decreases, quantity supplied decreases

positive relationship

Question 2

what is a contraction of supply

Answer 2

when selling prices decrease and quantity supplied decrease

Question 3

what is an expansion of supply

Answer 3

when selling prices increase and quantity supplied increases

Question 4

non price factors affecting supply

Answer 4

change to a businesses cost of production

changes to the productivity/ efficiency of a business

Question 5

explain profit motive

Answer 5

other things like production costs remaining equal or unchanged, a higher selling price in the marker usually means an increase in sales revenue and profits, making the production or supply of this good more attractive than if it is sold at a lower unit price. sellers expand supply

Question 6

explain consideration of opportunity costs

Answer 6

if sellers receive a higher price for what they sell, other thing being unchanged, the opportunity costs of producing another good or service rise, making it more profitable to reallocate resources away from other uses so that output can be increased, this expanding supply.

Question 7

what are movements alone a supply curve caused by

Answer 7

contractions and expansions of supply are ONLY caused by price