Supply Flashcards
What is supply?
The amount of goods a seller is prepared to offer for sale at any given price over a period of time
What is the relationship between price and supply?
Directly proportional
What does a supply curve look like?
Price on the perpendicular
Quantity on the horizontal
A dashed supply line
What causes a shift right in the supply curve?
A decrease in prices
What causes a shift left in the supply curve?
An increase in prices
What is fixed supply?
If it is impossible for sellers to increase supply when price rises
What does a fixed supply graph look like?
A straight vertical line on the amount of demand the good has
What are the factors that cause a shift in the supply curve?
-New technology
-Indirect taxes
-Subsidies
-Natural factors
-Production costs
Why does costs of production cause a shift in the supply curve?
-If it costs more to produce a product, its price would rise to compensate. leading to a shift to the left. And vice versa
Why do indirect taxes cause a shift in the supply curve?
-Indirect taxes represent a cost to firms
-When increased, a shift to the left
-When decreased, a shift to the right
Why do subsidies cause a shift in the supply curve?
-A subsidy that aids production will lead to more supply, as cost of production is cheaper
-A subsidy that discourages production will lead to decraesed supply, as cost of production is higher
What are indirect taxes?
Taxes levied on spending, such as VAT
What are subsidies?
Money that is paid by the government to make prices lower, decrease cost of production, usually to encourage production of a certain good
