Supply

Question 1

What does the Law of Supply state?

Answer 1

As the price (P) of a good increases, the quantity supplied (QS) increases also, and vice versa.

Question 2

What is the relationship between price and quantity supplied?

Answer 2

There is a positive relationship between price and quantity supplied.

Question 3

What does Sx represent in the supply function?

Answer 3

Sx = the supply of product x.

Question 4

What are the factors affecting supply?

Answer 4

Sx = f(Px, Pr, C, U, Tch, G)

Where:
- Px = Price of x
- Pr = Price of related goods
- C = Costs of production
- U = Unplanned factors
- Tch = Technology available

Question 5

What are the three types of unusually shaped supply curves?

Answer 5

1. Minimum Price
2. Resources at maximum capacity
3. Fixed Supply

Question 6

What is consumer surplus?

Answer 6

The difference between the maximum price a consumer is prepared to pay for a good and the actual price they paid for it.

Question 7

What is producer surplus?

Answer 7

The difference between the minimum price a supplier is prepared to accept for a product, and the actual price they received.