Supply

Question 1

Describe the principle of increasing cost.

Answer 1

Production costs increase in the short-run as the quantity produced increases, because new resources are not used as efficiently as the resources used previously.

Question 2

Define an “individual supply schedule”.

Answer 2

A schedule that shows the quantity of goods that an individual producer is willing to provide (supply) at various prices during a specified time.

Question 3

What are the variables that change aggregate supply?

Answer 3

Changes in:

1. Number of providers
2. Cost of inputs
3. Government taxation or subsidization
4. Technological advances

Question 4

Define “supply”.

Answer 4

Supply is the quantity of a commodity (good or service) that will be provided at alternative prices during a specified time.

Question 5

What is the slope of a normal supply curve?

Answer 5

A normal supply curve has a positive slope; at a higher price, a greater the quantity will be supplied.

Question 6

Distinguish between a change in quantity supplied and a change in supply.

Answer 6

A change in quantity supplied is movement along a given supply curve as a result of change in price only. A change in supply is a shift of a supply curve as a result of changes in variables other than price.

Question 7

Define “market supply schedule”.

Answer 7

A schedule that shows the quantity of a commodity that will be supplied by all providers in the market at various prices during a specified time.