Supply Flashcards
Supply
Indicates the various quantities of a good a firm is willing and able to produce at different possible prices during a particular period of time
law of supply
A law stating that there is a positive relationship between price and quantity supplied over a particular period of time ceteris paribus
Decrease/fall in supply
Inward shift
Increase/rise in supply
Outward shift
non price determinents of increase of supply
- increase of competitive supply
- increase in joint supply
- subsidies/decrease in tax
- favorable weather (better=prodcue more wheat)
- other products become less profitable to produce
- a fall in FOP costs
- technical progress
- increase in the supply of resources
- increase in business optimism and expectations
non price determinents of decrease of supply
- decrease of competitive supply
- decrease in joint supply
- no more subsidies/higher tax
- increase in FOP costs
- less favorable weather (bad= less harvesting)
- technical failures
- fall in supply of resources
- decrease in business optimism
Extension of supply
Movement along the curve increasing supply as price increases
Contraction of Supply
Movement along the curve, decreasing supply as price decreases
Competitive Supply
In the case of two goods, refers to production of one or the other by a firm (if the price of one increases, the supply of the other decreases)
Joint supply
Refers to production of two or more goods that are derived from a single product, so that it is not possible to produce more of one without producing more of the other
(If the price of one increases the supply of the other will inevitably increase)
Slaughter sheep: more skin & wool & mutton
Subsidy
an amount of money paid by the government for various reasons
=> prevent industry failure
=> support producers
Market Supply
the sum of all individual firms supply of a good or service
Shape of supply curve
Upward sloping because as the price increases producers are more motivated to produce a larger quantity of prodct/service
