Supply Flashcards
What is supply?
The quantity of a good / service producers are willing and able to produce withing a given time period.
What is the law of supply?
There is a direct relationship between price and quantity supplied. As price increases so does quantity supplied.
What causes right / left shifts on supply curves
A right shift is caused by a reduction in the cost of production, a left shift is caused by an increase in the cost of production
What are the non-price factors for supply?
Productivity
Indirect Tax
Number of Firms
Technology
Subsidies
Weather
Costs of production
How does productivity affect supply?
The productivity of labour
How does Indirect tax affect supply?
A tax on production that firms have to pay
How does the number of firms affect supply?
The more firms in the market, the supply curve will shift to the right.
How does technology affect supply?
An improvement in technology will lead to a right shift in the supply curve
How does subsidies affect supply?
If a subsidy is given to a firm a right shift in supply will happen
How does weather affect supply?
Good weather will cause a right shift in supply. What weather is good varies
How does the costs of production affect supply?
Transport , Labour, Regulations, Raw materials all affect supply.
