Micro: 1.2.4 Supply Flashcards
What does supply refer to?
Supply refers to the amount that producers are willing and able to sell at any given price in a given period of time.
What does the supply curve show?
The supply curve shows the relationship between price and the quantity supplied.
Why does the supply curve slope upwards?
The supply curve slopes upwards from left to right because, as price rises, rational profit-maximizing producers will supply more.
What happens when there is a change in the price of the good?
A change in the price of the good leads to a movement along the supply curve, not a shift in the supply curve.
What are factors that may cause a shift in the supply curve?
Factors that may cause a shift in the supply curve include changes in the costs of production, the introduction of new technology, indirect taxes (specific and ad valorem), subsidies, and changes in the number of firms in an industry.
