Supply

Question 1

Define supply

Answer 1

The quantity that producers are willing and able to sell at any given price over a specific time period

Question 2

Why does supply slope upwards

Answer 2

Because producers are willing to produce more at a higher price as they profit maximise

Question 3

PES definition

Answer 3

A measure of the responsiveness of quantity supplied in response to a change in price

Question 4

PES formula

Answer 4

PES = % change in quantity supplied / % change in price

Question 5

All PES’s are _________

Answer 5

Positive

Question 6

A PES greater than 1 is ___________

Answer 6

Elastic

Question 7

A PES between 0 and 1 is ___________

Answer 7

Inelastic

Question 8

A PES is greater than 1 if change in quantity supplied is __________ than change in price

Answer 8

Greater

Question 9

Unitary elastic supply = _____ - both % change in qs and % change in price are ________

Answer 9

1

Equal

Question 10

Factors which influence PES

Answer 10

TEASS

1. Time period
2. Economy
3. Availability of factors of production
4. Spare capacity
5. Stockpiles

Question 11

Lots of spare capacity = ___________

Answer 11

Elastic - More room to increase output

Question 12

Less spare capacity = ___________

Answer 12

Inelastic - less room to increase output

Question 13

High availability of factors of production = __________

Answer 13

Elastic

Question 14

Low availability of factors of production = __________

Answer 14

Inelastic

Question 15

Economy in good state = __________

Answer 15

Inelastic

Question 16

Economy in bad state = __________

Answer 16

Elastic

Question 17

Large stockpiles = ___________

Answer 17

Elastic

Question 18

Small stockpiles = ____________

Answer 18

Inelastic

Question 19

Short run = __________

Answer 19

Inelastic

Question 20

Long run = __________

Answer 20

Elastic

Question 21

When PES = 0 - It is known as ___________ ____________

Answer 21

Perfectly inelastic supply

Question 22

What does perfectly inelastic supply mean

Answer 22

Suppliers will not respond at all to a change in price

Question 23

When PES = Infinity - it is known as ___________ ____________

Answer 23

Perfectly elastic supply

Question 24

What does perfectly elastic supply mean

Answer 24

Any fall in price will completely stop supply

Question 25

Non-price determinants of supply

Answer 25

CPNTW 1. Costs 2. Productivity 3. Number of suppliers 4. Technology 5. Weather

Question 26

Higher costs = _______ supply | Lower costs = _______ supply

Answer 26

Higher costs = Less | Lower costs = More

Question 27

High productivity = ________ supply | Low productivity = ________ supply

Answer 27

High productivity = More supply | Low productivity = Less supply

Question 28

More suppliers = ________ supply | Fewer suppliers = _______ supply

Answer 28

More suppliers - More supply | Fewer suppliers - Less supply

Question 29

Better technology = _______ supply

Answer 29

More

Question 30

Good weather = _______ supply

Answer 30

More