Supply(1.2.2)

Question 1

What is supply?

Answer 1

the amount that producers are willing/able to produce at a given price/over a given period of time

Question 2

What is subsidy?

Answer 2

a grant given to businesses usually to encourage production of a certain good

Question 3

What is the relationship between supply and price?

Answer 3

there is a direct relationship
as price increases supply increases
as price decreases supply decreases

Question 4

Supply and price graph

Answer 4

Question 5

Five non-price factors affecting supply

Answer 5

changes in cost of production
external shocks
government subsidies
introduction of new technology
indirect taxes

Question 6

What does a shift to the right indicate on a graph?

Answer 6

increase in supply

Question 7

What does a shift to the left indicate on a graph?

Answer 7

decrease in supply

Question 8

What is change in cost of production?

Answer 8

if production costs rise the amount of supply will fall
if production costs fall the amount of supply will increase
e.g. if a clothes manufacturer sees increase costs in labour costs will go up

Question 9

What is introduction of new technology?

Answer 9

advances in technology such as A.I or robotics will lead to lower costs per unit meaning a firm can produce more at a given price
e.g. robots in car manufacturing factories means productivity and overall efficiencies increase

Question 10

What is indirect taxes?

Answer 10

they can be a major influence on level of supply
an increase or decrease will affect cost of production
e.g. VAT(Value Added Tax) is a consumption tax government levy on goods and services at each stage of the production or distribution cycle

Question 11

What is external shocks?

Answer 11

something happening in the world
e.g. economic crisis, natural disasters, war, diseases

Question 12

What is government subsidy?

Answer 12

payments offered by the government to encourage the supply of products
e.g. solar energy, electric cars