Supply Flashcards
Supply is a _______ quantity
Desired
Supply of TV by Samsung is not the total available stock of the TV. What do we know from this?
From this, we know that this is the quantity with Samsung WILLING to bring into the market, this is not the total stock.
Change in price brings change in supply. True or false?
True
When a certain quantity of a commodity is being supplied by all the firms, what is it called?
Market supply
What do you mean by individual supply?
Quantity of a commodity, an individual firm is willing and able to offer at a given price during given period of time
What do you mean by supply?
Supply refers to the quantity of a commodity. A firm is willing and able to offer for sale during given time period at given price.
Is stock a part of supply or supply a part of stock?
Supply is part of stock, which producer is willing to bring into market for sale.
What do you mean by stock?
Total quantity of a particular commodity that is available with the firm at particular point of time
Stock can be less than supply. True or false?
False. Stock can never be less than supply.
Is supply a flow concept or stock?
Supply is a flow concept as it relates to a period of time
Why is stock not a flow concept?
Stock is not a flow concept as it relates to a PARTICULAR point of time
Stock is not related to price of commodity as it indicates ______
Fixed quantity
What is law of supply?
When price increases, supply also increases
Why does supply increase with increase in price?
This happens because, higher price means higher profit. If price is high producing more will be profitable.
Important point to know about increase in supply due to increase in price.
This is true, only if other factors remain constant
What are the determinants of individual supply?
- Price of commodity.
- Price of other goods.
- Price of factors of production.
- State of technology.
- Government policy( taxation, and subsidies).
- Objective/Goal of firm.
If the prices of factor of production increases, what happens?
If the prices of factors of production increases, the cost of production also increases. This decreases the profitability. Hence, seller reduces the supply.
How does state of technology help raise the profit margin?
Advanced and improved technology reduces cost of production. This raises is the profit margin.
How do taxes lower profit margin?
Increase in taxes, raises cost of production, thus reduces the supply due to lower profit margin
Do firms always supply only when price increases?
Generally, supply of commodity increases only with increase in price. But no not always.
Why do firms supply even at lower prices sometimes?
The objective behind this is to capture larger customer base and to establish themselves as a reliable brand
What are the determinants of market supply?
All the determinants of individual supply along with:
1. Number of firms in market.
2. Future expectation regarding price.
3. Means of transportation and communication.
If the number of firm in industry increases market supply______
Increases
If sellers expect rise in price in near future, then?
Current market supply will decrease
Improvement in means of transportation and communication do what?
Help maintain adequate supply of commodity
How is market supply curve obtained?
Market supply curve is obtained by horizontal summation of individual supply curves
What is law of supply?
Law of supply states the direct relationship between price and quantity supplied, keeping all the factors constant
In unit elastic supply, where does supply curve start from?
Origin
In more than unit elastic supply, where does supply of start from?
Intercept on Y axis
In less than unit elastic supply, what is supply curve?
Intercept on X axis
In which type of supply is the supply curve parallel to X axis?
Perfectly elastic supply
When a supply curve parallel to Y axis
In perfectly inelastic supply
