Chapter 3: The Market Forces of Supply Flashcards
the claim that the quantity supplied of a good rises (falls) when the price of the good rises (falls), other things equal
Law of Supply
states that there is a positive relationship between price and quantity of a good supplied.
Law of Supply
is the willingness and ability of sellers to supply goods or services at a particular price.
Supply
of any good is the amount that sellers are willing and able to sell.
Quantity of supplied
A table that shows the relationship between the price of a good and the quantity supplied.
Supply schedule
Is a graph illustrating how much of a product a firm will supply at different prices.
Supply curve
a movement along the supplied curve caused by a change in the price of the good itself.
Change in Quantity Supplied
shows how price affects quantity supplied, other things being equal.
Supply Curve
True or False
A fall in input prices makes production more profitable at each output price, so firms supply a larger quantity at each price, and the S curve shifts to the left.
False
A fall in input prices makes production more profitable at each output price, so firms supply a larger quantity at each price, and the S curve shifts to the right.
8 Factors affecting of supply
- Input Prices
- # of sellers
- Technology
- Price Expected
- Price of Related Goods
- Taxes
- Subsidies
- Weather & Season
True or False
A cost-saving technological improvement has the same effect as a fall in input prices, and shifts S curve to the left.
False
Correct:
A cost-saving technological improvement has the same effect as a fall in input prices, and shifts S curve to the right.
True or False
Advances in technology reduce the number of inputs needed to produce a given supply of goods.
True
True or False
An increase in the number of sellers increases the quantity supplied at each price and shifts S curve to the right.
True
True or False
If suppliers expect prices to fall in the future, they may store today’s supply to reap higher profits later (If good is not perishable)
False
If price of a ____________ in production of good X rises (falls), supply of good X falls (rises)
substitute
If price of a ____________ in production of good X rises (falls), supply of good X rises (falls)
complement
True or False
When taxes go up, costs go up, and profits go down, leading suppliers to reduce output.
True
True
When government subsidies go down, costs go up, and profits go down, leading suppliers to decrease output
True
True or False
During bad weather, supply falls and during good weather supply rises.
True
True or False
Supply rises during peak seasons, and supply falls during off-peak seasons
True
