Determinants Demand&Supply

Question 1

Subsidies and Taxes

Answer 1

Subsidies: government payment to producers for each unit produce, will increase supply.
Taxes: Payments from firms to the government, will decrease supply.

Question 2

Technology

Answer 2

New innovation allows firms to find resources more efficiently

Question 3

Compliments and Substitutes

Answer 3

Substitutes in production. If another good that a firm could produce rises in price, firms will produce more of it and less of what they used to produce.

Question 4

Resource costs

Answer 4

If the costs of inputs falls, supply will increase. If input costs rise, supply decreases.

Question 5

Expectations of producers

Answer 5

If firms expect the prices of their goods to rise, they will increase production now. If they expect prices to fall, they will reduce supply now.

Question 6

Size of the market

Answer 6

If the number of firms in the market increases, supply increases. Vice versa.

Question 7

Name the determinants of Supply

Answer 7

• Subsidies and Taxes
• Technology
• Compliments and Substitutes
• Resource costs
• Expectations of producers
• Size of the market

Question 8

Name the determinants of Demand

Answer 8

• Tastes&Preferences
• Complimentary and Substitute
• Expectations
• Income
• Size of market
• Special circumstances