Supply

Question 1

Supply

Answer 1

Supply: Quantity of good produced by firms

Slopes upwards because:
- Price rises, fims incentivised to make more as greater profit can be made
- Higher prices make it more profitable to produce, new firms may enter

Question 2

Types of Supply

Answer 2

• Competitive Supply: Firms may have many different products they are able to produce w/ FOP (e.g land to produce onions or peppers)
• Joint Supply: Firms may produce goods jointly, when one good is byproduct of another (e.g cows produce leather & milk)

Question 3

Shifts in Supply

Answer 3

-Cost Of Production: Decrease in costs will increase supply, able to produce more for cheaper price
- Indirect Taxes: Tax on a good, costs rise so supply falls
- Subsidies: Supply increases due to costs falling
- Price of Related Goods: If good in competitive supply increases in price, supply may fall as firms focus on producing other good

Question 4

Application

(Supply)

Answer 4

Decrease in Supply:
- Supply of housing falls as a result of natural disasters (e.g floods, tsunamis)

Increase in S