EC2 Lesson 2.2: Supply Flashcards
It is the relationship between price and quantity supplied
Supply
It is the quantity of goods and services that the sellers are willing and able to sell or produce
Supply
It has positive relationship with price.
Supply
It states that “All other things remaining constant, price and quantity supplied are directly proportional.” There is a positive relationship between price and quantity supplied.
Law of Supply
All other things remaining constant
Ceteris paribus
It is tabular presentation of supply showing the price and quantity supplied of a particular good.
Supply Schedule
It is the graphical presentation of the supply schedule
Supply Curve
__________ is upward sloping to the right showing a direct relationship between price and quantity supplied. Therefore, when price increases in the Y axis, its quantity supplied also increases in the X axis.
Supply curve
Changes in Supply brought by Price Factors
- Movement along the Supply Curve/Change in Quantity Supplied
- Shift of the Supply curve/change in supply
This only occur when the price of the commodity changes.
Movement along the Supply Curve/Change in Quantity Supplied
Changes in Supply brought about by Non-Price Factors
Shift of the Supply Curve/Change in Supply
non-price factors that affect the supply curve.
- Subsidies and Taxes/Government action
- Technology
- Other goods
- Number of sellers
- Expectation
- Cost of Production
This refers to the power of the government to intervene in the market that will affect the supply.
Subsidies, Taxes/Government Action.
Some of the government actions are the?
subsidies, taxes and regulation
incentive given by the government to motivate the producer to provide more products in the market.
Subsidies
If government imposes _____, then the supply for commodity will increase and supply curve shift to the right.
subsidies
power of the government to impose a certain percentage to persons and property. It is said that it is universal because the state can impose this. It should be paid compulsory
taxes
If the government imposes higher tax to certain product or business, the seller and producer are less likely to sell or produce the product therefore supply curve will shift to the____
left
power of the government to impose some rules to control some political, administrative and economic activity done within the vicinity of the state. (ex. permits and ordinance before putting up a business)
Regulations
Increasing the control of regulation, or its strict implementation, the less likely the firms want to enter or to produce a commodity. In this case, supply curve will shift to the ___
left
refers to the machine, methods and processes to improve the production of the firm which leads to productivity.
technology
With the use of high _____, the producers are more motivated to produce and this will cause an increase of supply.
technology
an ______ does not motivated a producer to produce which will lead to a decrease in the supply of a particular good.
outmoded technology
If the producers noticed that producing other goods will give them more profit, therefore the supply for the goods they produce at present will decline
Other Goods
This refers to the number of sellers in the industry.
number of sellers
refers to a group of firms selling the same product.
industry
refers to all firms producing the product
supply
If the number of firms increases, then more goods will be produced at each price and supply will ______ and supply curve will shift to the ____
increase, right
A decline in the number of firm would shift the supply curve to the ____
left
This is the anticipation of the firms about the price of commodity they are selling. If firms expect that the price of goods they produce will increase in the future, then they will hold off selling at least part of the production until the price rises.
expectation
Expectation of future price increases tends to _____ the supply.
reduce
expectation of future price decreases tends to _____ supply.
increase
This refers to the expenses incurred in the production
Cost of production
If the price of raw materials and other factors of production needed to produce a certain product is expensive, the supply of that good will _______
decrease
if the cost of production is lesser, supply of the goods will _______
increase
this means that all forces in the market are in the balance.
equilibrium
It is the point in the graph where the demand and supply meet or quantity demanded is equal to quantity supplied (Qd = Qs).
Market equilibrium
Market equilibrium has two points:
equilibrium price
equilibrium quantity.
It is the price at which quantity demand is equal to quantity supplied.
Equilibrium Price (P*)
It is the quantity where demand and supply are equal. Equilibrium is difficult to attain in the market due to disturbances.
Equilibrium Quantity (Q*)
The situation where demand is greater than supply
shortage
When shortage is experienced in the market, price of that good will ________
increase
Between price and quantity, _______ has more control to the price than the quantity.
government
The government may set the______ or ______
price floor or price ceiling.
It is the minimum price set by the government in which the commodity can be purchased.
Price Floor
It is the maximum price set by the government in which the commodity can be purchased.
Price Ceiling
As the demand increases, the equilibrium point (P* and Q*) _______
also increases
As the demand decreases the equilibrium point (P* and Q*) ________
also decreases
As the supply increases, the equilibrium quantity increases while the equilibrium price ______
decreases
