Supply Flashcards
What does the supply curve represent?
The supply curve shows the relationship between market prices and the quantities that suppliers are prepared to offer for sale.
What does the Law of Supply state?
The Law of Supply states that more will be supplied at a higher price than at a lower price.
Why is more supplied at higher prices?
Higher prices make production more profitable, encouraging existing producers to increase output and attracting new producers to the market.
How does the supply curve typically slope?
The supply curve slopes upwards from left to right, indicating a direct relationship between price and quantity supplied.
What are the two main factors affecting supply?
The two main factors are price and non-price factors.
What is the impact of price changes on supply?
Price changes cause extensions (increases) or contractions (decreases) in supply along the curve.
What happens when supply increases?
An increase in supply means more is supplied at each and every price, shifting the supply curve to the right.
What happens when supply decreases?
A decrease in supply means less is supplied at each and every price, shifting the supply curve to the left.
How do changes in the price of factors of production affect supply?
An increase in factor prices, such as wages or raw materials, increases production costs and decreases supply, unless offset by productivity gains.
How do methods of production affect supply?
Improvements in production efficiency reduce costs, increase profitability, and shift the supply curve to the right.
What is the impact of government taxes on supply?
Taxes, such as VAT or duties, increase production costs and decrease supply, shifting the supply curve to the left.
What is the impact of government subsidies on supply?
Subsidies reduce production costs and increase supply, shifting the supply curve to the right.
How do seasonal factors affect supply?
Seasonal factors, such as climate, can affect agricultural goods, with poor conditions decreasing supply and good conditions increasing it.
How do competitive goods affect supply?
If the price of a substitute good rises, producers may shift resources to the more profitable good, decreasing supply for the original good.
What are goods in joint supply?
Goods in joint supply are produced together, where the production of one automatically results in the production of another, like meat and animal skins.
