Supply Flashcards
1
Q
Define supply
A
Supply is the amount of a good/service that suppliers are willing and able to supply at any given price
2
Q
Name 2 reasons why the supply curve may shift
A
- GVMT intervention
2. Changes in the cost of production
3
Q
Define price elasticity of supply (PES)
A
POS measures the responsiveness of supply to a change in price
4
Q
How do you work out PES
A
POS = (% change in QS) divided by (% change in P)
5
Q
Name three influencers of PES
A
- Time period
- Availability of stock
- Spare capacity of FOP
6
Q
How does the long and short run effect price elasticity
A
In the short run, products are more inelastic as it takes time to produce. However, in the long run they’ll be more elastic as their is more of the goods/services.
