3.3 - supply of goods/services Flashcards
What is market supply?
the quantity of a good or service that all the firms in a market plan to sell at given prices in a given time period §
What is profit?
the difference between total sales revenue and total costs of production
what is total revenue?
all the money received by a firm from selling its total output
what is a condition of supply?
determinant of supply that causes the supply curve to shift, other than price
what causes a movement along the supply curve?
change in price
what causes the supply curve to shift?
a change in a condition of supply
what are the conditions of supply?
- costs of production
- technical progress
- taxes imposed on firms
- subsidies granted by the government
what are the costs of production?
wage costs, raw material cost, energy cost, costs of borrowing
which way is an increase in supply?
right
what is a decrease in supply?
left
Which way does the curve shift when experiencing technical progress?
right - supply increase
which way does it shift when experiencing VAT (tax)?
left
What is an ad valorem tax?
tax that changes as a % according to the value of the item (VAT)
What is a specific tax?
tax on product regardless of its price
what does an ad valorem tax graph look like?
supply curve gets skewed
