supply 1.2.4

Question 1

supply

Answer 1

the quantity of a good or service producers are willing and able to produce at a given time period

Question 2

law of supply

Answer 2

there is a direct relationship between price and quantity supplied. As price increases Qs increases

assuming cetirus paribus

Question 3

supply curve is upwards sloping because…

Answer 3

• If price increases, it is more profitable for firms to supply the good, so supply
  increases.
• High prices encourage new firms to enter the market, because it seems
  profitable, so supply increases.
• With larger outputs, firm’s costs increase, so they need to charge a higher
  price to cover the costs.

Question 4

a reduction in cost of production

Answer 4

shifts supply curve to the right resulting in more quantity supplied. producers are more willing and able to supply more

price is the same

Question 5

an increase in the cost of production

Answer 5

shifts supply curve to the left resulting in less qunatitiy supplied. producers are less willing and able to produce with higher costs to production

Question 6

non-price factors that affect supply

Answer 6

PINTSWC

Question 7

non-price factors that affect supply

P

Answer 7

productivity
* productivity of labour/capital= the output per worker in a period of time. if workers become more productive theyre producing more whilst being paid the same. this reduces costs of production and shifts the supply curve to the right

Question 8

non-price factors that affect supply

I

Answer 8

**indirect tax **
tax on production that firms have to pay. this increases cost of production so shifts S1 to the left . vice versa

Question 9

non-price factors that affect supply

N

Answer 9

**number of firms **
the more firms that are in the market, supply will shift from S1 to S2 leading to more supply in the market. vice versa

Question 10

non-price factors that affect supply

T

Answer 10

technology
increases the willingness and ablility to supply by affecting costs of production.
improvement in technology reduces costs of production, shifting S1 to the right. vice versa

Question 11

non-price factors that affect supply

S

Answer 11

subsidy
a money grand given by govenments to producers to lower costs of production and to encourage an increase in output

if a subsidy has been given or has increased in sixe, supply curve shifts to the right because costs of production have been lowered. vice versa

Question 12

non-price factors that affect supply

w

Answer 12

weather
good weather allows supply to shift to the right . vice versa