Supply Flashcards
What is Supply?
the quantity of a good or service that a producer is willing and able to produce at a given price at any time
Law of Supply
price and quantity are directly related
The profit motive
When the market price rises following an income in demand, increase business output
Production and cost
When output expands, a firm’s production costs tend to rise, therefore a higher price is needed to cover these extra costs of production
new entrants coming into the market
Higher prices may create an incentive for other businesses to enter the market leading to an increase in total supply
Non-price factors affecting supply
taxes, technology, resource prices
Expansion in supply
When there is an increase in price and all other factors are kept constant
Contraction in supply
When there is a decrease in price and the supply curve slopes downwards towards the left side
Increase in supply curve
supply curve shifts to the right
Decrease in supply curve
supply curve shifts to the left
