Supply

Question 1

define supply

Answer 1

supply refers to the quantity of a good that firms are willing to make available at various prices over a particular period of time

Question 2

what is individual supply?

Answer 2

the quantity of a good supplied by an individual firm at different prices

Question 3

what is market/ aggregate supply?

Answer 3

the quantity of a good supplied by all the firms in the market at different prices

i.e. found by adding all individual supplies

Question 4

what is a supply schedule?

Answer 4

a table illustrating the different quantities of a good made available for sale at various market prices at any given time.

Question 5

what is an individual supply schedule?

Answer 5

a table illustrating the different quantities of a good made available for sale by an individual firm at various market prices at any given time.

Question 6

what is a market/ aggregate schedule?

Answer 6

a table illustrating the total quantities of a good that all firms in the market are willing to make available for sale at various market prices at any given time.

Question 7

what is a supply curve

Answer 7

a graph illustrating the number of units of a good made available for sale at various market prices at any given time. There is a positive relationship between price and quantity supplied. The supply curve is usually upward sloping from left to right.

Question 8

what is an individual supply curve?

Answer 8

a graph illustrating the number of units of a good made available for sale by an individual firm at various market prices at any given time.

Question 9

what is a market/aggregate supply curve?

Answer 9

a graph illustrating the total quantities of a good made available for sale by all the firms in the market at various market prices at any given time.

Question 10

circumstances of supply

Answer 10

restricted by a minimum market price, restricted by limited capacity,
fixed supply

Question 11

supply restricted by a minimum market price

Answer 11

any price below a certain level would not cover their costs and would result in the firm making a loss.

in the long run- firms have to cover their fixed costs

Question 12

supply restricted by limited capacity

Answer 12

e.g. shortage of labour or raw material,…

Question 13

fixed supply

Answer 13

(perfect inelastic supply)

when the supply of a product cannot be changed in the short run

any change in price will not bring about change in the quantity supplied

e.g. seating capacity of a stadium,…

Question 14

a movement along the supply curve

Answer 14

is caused by a change in the price of the good or service

Question 15

a shift in the supply curve

Answer 15

is caused by any non-price determinant of supply

increase= shift to the right
decrease= shift to the left

Question 16

factors affecting the supply of a good

Answer 16

price of the good itself,
price of related goods,
cost of production,
factors outside the control of the firm,
state of technology,
taxation/subsidy,
objectives of the firm,
number of firms in the industry

Question 17

the supply function

Answer 17

Sy= f (Py, Pr, C, U, Tch, Tx, O, N)

Question 18

what is a producer surplus?

Answer 18

the difference between the lowest price a supplier is willing to accept for a good and the price they actually receive.