Supply

Question 1

supply

Answer 1

the quantity of a good or service that a producer is willing and able to sell at each and every price level

Question 2

law of supply

Answer 2

there is a positive relationship between price of a good and supply

Question 3

movement along a supply curve

Answer 3

price change

Question 4

increase in price, on supply curve

Answer 4

expansion

Question 5

decrease in price, on supply curve

Answer 5

contraction

Question 6

reasons for the law of supply/ shape of curve

Answer 6

-the profit motive
-production and cost
-new entrants coming into the market

Question 7

the profit motive

Answer 7

if the market price rises following an increase in demand, it becomes more profitable for businesses to increase their output

Question 8

‘production and cost’ reason for the shape of the supply curve

Answer 8

when output expands, a firm’s production costs tend to rise, therefore a higher price is needed to cover these extra costs of production

Question 9

‘new entrants coming into the market’ reason for the shape of supply curve

Answer 9

higher prices may create an incentive for other businesses to enter a market leading to an increase in total supply

Question 10

non-price determinants of supply

Answer 10

Productivity
Indirect taxes
Number of firms
Technology
Subsidy
Weather
Cost of production

Question 11

Result of non-price determinants on a supply curve

Answer 11

shift