Lesson 19 pg. 59 - 62

Question 1

Describe the law of supply

Answer 1

> another basic economic principle, often talked about in conjunction with demand
states that the direct relationship between the price of a good and the amount that suppliers will make available: “other things remaining equal, as the price of a good increases, the quantity supplied also increases in a free market economy”
if price of good drops, quantity that is supplied of that good also falls

Question 2

Define the supply schedule

Answer 2

supply schedule - list of numbers that compares price with quantity supplied

Question 3

Define supply curve

Answer 3

supply curve - graphic representation of quantity of goods supplied at different prices
>entire curve represents the supply that manufacturers are willing to produce for their area
>any single point along this curve depicts the quantity supplied at the corresponding price
>slopes upward to the right

Question 4

List the six factors that can cause changes in supply

Answer 4

1. Technology
2. Resource prices
3. Prices of Related Goods
4. Number of Sellers
5. Producer Expectations
6. Government Taxes, Subsidies, and Regulations

Question 5

Describe how technology affects supply

Answer 5

> technological improvements constitute the largest influence on amount of goods that producers are able to supply
with more technology comes more efficient production leading to a dramatic drop in cost of good

Question 6

Describe how resource prices affect supply

Answer 6

> amount that producers have to pay to obtain resources they need will influence how much producers have to sell their product for

Question 7

Describe how prices of related goods

Answer 7

> producers will only provide what consumers are willing to pay for

Question 8

Describe how number of sellers affects supply

Answer 8

> supply of a goods also shifts as number of people working to supply that good changes

Question 9

Describe how producer expectations affect supply

Answer 9

> supply is also affected by the expectations producers have about the future pricing of their goods

Question 10

Describe how government taxes, subsidies, and regulations

Answer 10

> role that government plays in supply of goods made available to public is in direct proportion to how much government becomes involved in market
more taxes and regulations on producers will make prices increase

Question 11

Define subsidies

Answer 11

subsidies - government giving money to a business to encourage production

Question 12

Give the difference between change in supply and change in quantity supplied

Answer 12

> change in quantity supplied is caused only by a change in price within an existing supply
when there is change in supply, the whole supply curve shifts
when there is change in quantity supplied, it is illustrated by moving from one point on a supply curve to another point along the same curve