Supply

Question 1

Why is the supply curve upward sloping?

Answer 1

1. To maximise profit
   - as prices increase it is mre profitable to supply so quantity increases
2. Outside firms
   - when prices increase, outside firms join the market so more goods are being supplied

Question 2

Extension

Answer 2

an increase in quantity supplied as a result of a increase in price
- a movement up the supply curve

Question 3

Contraction

Answer 3

a decrease in quantity supplied as a result of an decrease in price
- a movement down the supply curve

Question 4

A shift in the supply curve

Answer 4

How suppluy responds to a change in a non-price factor

Question 5

Indirect Taxes

Answer 5

Taxes levied on goods and services

Question 6

Subsidies

Answer 6

Payments given to a firm by the government to incentivize production and reduce cost of production

Question 7

Shifts in supply

Answer 7

1. costs of production
2. indirect taxes
3. subsidies
4. the price of related goods

Question 8

Changes in cost of production

Answer 8

1. Technological progress
- rate of output increases
- can substitute labour by capital so decrease wages and more productive
- new machines increases efficiency

2. Globalization
- can trade overseas for cheaper raw materials

3. Falling wages
- immigration may push wage rates down as immigrants are more likely to work for lower wages