supply Flashcards
what is supply?
the number of goods/services business are willing to sell at a given price in a specific time period
what is the relationship between supply and price?
a direct relationship
if the price increases what happens to the quantity supplied?
it increases
if the price decreases what happens to the quantity supplied?
it decreases
when are businesses incentivises to supply more of the product?
at higher prices
which way does the supply curve slope?
upwards from left to right
what does an increase in price lead to on the supply curve?
a move up the supply curve
what does a decrease in price lead to on the supply curve?
a movement down the supply curve
what does a change in price cause on the supply curve?
a movement along the supply curve
what does a change in any other factor affecting supply lead to on the supply curve?
it will shift the entire supply curve to the left or right
what are the non-price factors affecting supply?
changes in cost of production, new technology, government subsides, indirect taxes, external shocks
if a firms cost of production increases due to the increase in the price of a key resource what will happen to the supply?
there will be a decrease in supply as the firm can only afford to produce fewer products
if there is a shift in the supply curve what happens to the supply?
it had increases or decreased
if there is a shift in the supply curve what happens to the price?
it remains the same
what does an increase in cost of production mean for a firm?
it makes it more expensive to produce each unit meaning there is less production
what does advances in technology lead to?
lower costs of production and businesses will be able to produce more at a given price
what happens if the government increases indirect taxes on businesses?
causes an increase in the cost of production as firms have to pay extra costs
what is a subsidy?
an amount of money paid to a firm by government for each unit produced
what will a subsidy reduce?
the cost of production
