market

Question 1

what will have major impact on the price of all products

Answer 1

the amount that a business is able to supply

Question 2

what generally determines the amount a firm is willing to supply

Answer 2

the more profit they make by supplying a certain product, the more they are willing to supply

Question 3

what are the 5 supply factors

Answer 3

• changes in costs of production
• introduction of new tech
• indirect taxes
• government subsidies
• external shocks

Question 4

changes in costs of production (affects on supply)

Answer 4

• if production costs rise, amount supplied falls

- if production costs fall, amount supplied will rise

Question 5

introduction of new technology (affects on supply)

Answer 5

new tech should lead to reduced costs of production as well

• increase in supply
• firms will supply more due to the offer of higher profits

Question 6

government subsidies (affects on supply)

Answer 6

opposite of taxes, occurs when governments wanna encourage the supply of a product. Cutting costs of production, meaning it increases supply

Question 7

indirect taxes (affects on supply)

Answer 7

taxes that the government imposes on goods and services (e.g VAT), its like another cost therefore:
- an increase means a reduction in supply whereas decrease in indirect tax rate cuts total costs and therefore increased supply

Question 8

external shocks

Answer 8

unexpected events, e.g economic crisis, poor harvests or natural disasters which can reduce total quantity - leading to increase in price of item - therefore rise in production costs and reduce supply

Question 9

commodity markets

Answer 9

are markets for undifferentiated products, like raw materials like gold crude oil and rice

Question 10

equilibrium

Answer 10

describes a situation where supply and demand are balanced, making price stable

Question 11

how is commodity markets price determined

Answer 11

by the interaction of supply and demand

• if demand is higher than supply, price of product rises to make it level
• if supply is higher than demand, price is decreased to make sure all supplied is sold

Question 12

what does a supply and demand diagram show

Answer 12

how much of a product would be demanded at a range of different price levels

Question 13

if theres an increases in supply or demand which way does the line move

Answer 13

right

Question 14

if theres an decreases in supply or demand which way does the line move

Answer 14

left

Question 15

if price moves up which way does the demand and supply curve move?

Answer 15

demand: left
supply: right

Question 16

if price moves down which way does the demand and supply curve move?

Answer 16

demand: right
supply: left