SUPPLY

Question 1

what is supply

Answer 1

the quantity of a good or service that producers are willing and able to sell at any given price in a given period of time.

Question 2

what is a firm

Answer 2

an organisation that brings together factors of production in order to produce output

Question 3

what are the four forms firms can take

Answer 3

sole proprietor
partnership
private joint stock companies
public joint stock companies

Question 4

what is a sole proprietor

Answer 4

when the owner of the firm also runs the firm

Question 5

what is a partnership

Answer 5

when profits and debts are shared between partners

Question 6

what is a private joint stock company

Answer 6

a company owned by shareholders who are invited

Question 7

what is a public joint tock company

Answer 7

a company owned by shareholders where shares are sold on the stock exchange

Question 8

what is an assumptions about firms

Answer 8

they aim to maximise profits

Question 9

what is a supply curve

Answer 9

a graph showing the quantity supplied at any given price

Question 10

what is a competitive market

Answer 10

a market when an individual firm cannot influence the price of the good or the service they are selling because of competition from other firms

Question 11

what is an individual supply curve

Answer 11

the amount an individual firm is willing and able to supply at any given time period

Question 12

what is a market supply curve

Answer 12

shows the total amount of product that firms are willing and able to supply at a given price in a given time period.

Question 13

what price will firms want to sell goods at (ceteris paribus)

Answer 13

high prices

Question 14

what is on the x axis of a supply graph

Answer 14

quantity per period

Question 15

what is on the y axis of a supply graph

Answer 15

price

Question 16

what will firms do if the price of a good decreases

Answer 16

they will find it less profitable to supply the good and will reduce the supply - causing movement along the curve

Question 17

what influences the quantity firms are willing to supply

Answer 17

production costs
the technology of production
taxes and subsidies
prices of other goods
expected prices
number of firms in the market

Question 18

if firms are aiming to maximise profits what do they need to use

Answer 18

the four inputs (4 factors of production)

Question 19

if the cost of inputs increases what are firms expected to do

Answer 19

expected to supply less

Question 20

if technology is introduced what happens

Answer 20

firms produce more cost-efficiently causing a shift to the right

Question 21

what happens when taxes increase (firms)

Answer 21

the price paid by the consumers is larger than the revenue received by the firm so firms will supply less

Question 22

what happens when firms get a subsidy

Answer 22

this reduces the firms costs so the firms will supply more

Question 23

if the price of your good increases what might customers do

Answer 23

switch to a cheaper substitute - but higher prices is good as it raises profitability for the firm

Question 24

how do expected prices affect firms

Answer 24

they make decisions based on future prices e.g. allowing stock to build up in anticipation of higher price.

Question 25

if firms join the market what'll happen to the supply curve

Answer 25

it will shift to the right

Question 26

if firms leave the market what'll happen to the supply curve

Answer 26

it will shift to the left.

Question 27

what is a cartel

Answer 27

an agreement between firms in a market on price and output with the intention of maximising their joint profits.

Question 28

if there is a change in market price what will happen to the supply curve

Answer 28

a movement along the curve will be induced - an extension or contraction

Question 29

if there is a change in any other factors what will happen to the supply curve

Answer 29

a shift will be induced

Question 30

what are the three reasons that the supply curves are drawn sloping down

Answer 30

the profit motive Costs of production new entrants coming into the market

Question 31

what is the profit motive

Answer 31

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

Question 32

what is production and costs

Answer 32

when output expands, production costs tend to rise so a higher price is needed to cover theses costs. This may be due to diminishing returns as more factor inputs are added to production

Question 33

Why do new entrants coming into the market

Answer 33

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

Question 34

what is supply extension

Answer 34

a rise in the market price brings about an extension of supply - producers are responding to the profit motive

Question 35

what is supply contraction

Answer 35

if market prices fall we expect to see a contraction of supply as producers have less incentive to produce at lower prices.

Question 36

what is market supply

Answer 36

total supply brought to the market by producers at each price.

Question 37

how do you calculate market supply

Answer 37

you sum all of the individual markets supplies together.

Question 38

what are the causes of shifts in the market supply curve

Answer 38

changes in unit costs of production a fall in exchange rate advances in production technologies the entry of nr producers taxes, subsidies and government regulations favourable weather conditions

Question 39

what does lower unit costs mean

Answer 39

that a business can supply more at each price e.g. higher productivity - outward shift

Question 40

what does higher unit costs mean

Answer 40

that a business can supply less at each price e.g. a rise in wage rates or increase in energy prices/raw materials - inward shift

Question 41

what does a depreciated exchange rate mean

Answer 41

an increase in prices of imported components/ raw materials - inward shift

Question 42

what shift does having advances in production technology mean

Answer 42

an outward shift of supply

Question 43

what does the entrance of competitors do to the supply curve

Answer 43

outward sift - as there are more suppliers

Question 44

what do taxes cause

Answer 44

an inward shift of supply

Question 45

what do subsidies cause

Answer 45

an outward shift of supply

Question 46

what do regulations increasing costs do

Answer 46

cause an inward shift on supply

Question 47

what do favourable weather conditions affect

Answer 47

agricultural products

Question 48

what is joint supply

Answer 48

where an increase or decrease in the supply of one good leads to an increase or decrease in the supply of a by-product

Question 49

What is a cartel

Answer 49

cartels mean a group of suppliers may act as if they were one supplier and restrict supply in the market