Chapter 4: Supply Flashcards
Define sole trader
A small business such as a newsagent where the owner and the firm have the same legal identity
Define partnership
Where profits and debts are shared between the partners in the business. The owners also share the legal identity of the business and are often involved in running the business
What’s one of the main differences between private and public limited companies?
The shares of a public limited company are traded on the stock exchange whereas this is not the case with the private company
Define competitive market
A market in which individual firms cannot influence the price of the good or service they are selling, because of competition from other firms
Define supply curve
A graph showing the quantity supplied at any given price
Name 6 things that influence supply
- Production costs
- Technology of production
- Taxes and subsidies
- Prices of related goods
- Expected prices
- Number of firms in the market
What effect does an increase in the costs of production have on the supply curve
Shifts inwards
What happens to supply if a new technology of production is introduced meaning firms can produce more cost-effectively
Shift supply outwards
Draw a diagram illustrating the effect of taxes on supply
Figure 4.4
Draw a diagram illustrating the effect of subsidies on supply
Figure 4.4
Define competitive supply
A situation in which a firm can use its factors of production to produce alternative products
Define joint supply
Where a firm produces more than one product together
What causes a movement along the supply curve
A change in price
What causes a shift in supply
Non-price influences on supply
What does the supply curve trace out a positive relationship between
Price and quantity supplied
