supply Flashcards
what is supply
the total amount of a good or service offered for sale at all possible prices that would prevail in the market
if the market is offering a high price for a product, what will happen
the supplier will increase production
and the quantity supplied will increase
law of supply
an increase in price will result in an increase in the quantity supplied
a decrease in price will cause a decrease in the amount supplied
point slides up and down the line
change in quantity supply
can only be caused by a change in the PRICE of a good/service
movement along the supply curve
change in supply
caused by changes in taxes/subsidies, resource prices, productivity, technology, or competition
shift in supply curve
how does cost of input effect change in supply
refers to anything needed to make a product or provide a service
shortage or surplus of inputs
productivity - change in supply
workers’ level of productivity can vary and this affects costs
technological improvement
advances in technology can increase production
taxes and subsidies
a tax increases the costs of production
subsidies are monetary grants from the government to help developproduction
competition
more companies competing means more sellers which means more supply
why is competition important
leads to best prices because consumers want to pay less
leads to better products
leads businesses to focus on customers
market structure
the measure and degree of competition among firms operating in the same industry
perfect competition
large number of buyers and sellers who exchange identical products
consumer will buy at the cheapest store, setting market price
easy entry into market
monopolistic competition
large number of producers
similar products, but varied
some control over prices
few barriers to enter market
oligopolies
very few large sellers dominate market
companies compete
difficult to enter market
ex: coke vs pepsi
