Supply

Question 1

Supply

Answer 1

Quantity of a good/service producers are willing and able to produce at a given price in a given time period

Question 2

Law of supply

Answer 2

Direct relationship between pice and quantity supplied. As price increases, quantity supplied increases. As price decreases, quantity supplied decreases. Assuming ceteris paribus.

Question 3

Illustrating movement along supply curve

What happens to supply curve when price increases

What happens to supply curve when price decreases

Answer 3

Extension of supply Quantity supplied increases

Contraction of supply Quantity supplied decreases

Question 4

How to illustrate law of supply on diagram by using movement along supply curve

Answer 4

Extension of supply

Contraction of supply

Question 5

Direct relationship (P inc Qs inc) (P dec Qs dec)

Answer 5

When price increase quantity increases because producers have more incentive to sell at a higher price and making more profit. Vice versa

Increase quantity means higher cost of production therefore, firms increases price to lower cost of production.

Question 6

What happens to supply when cost of production is higher and lower

Answer 6

When cost of production is higher, producers are less willing and able to supply. Therefore supply curve shifts backwards or production of supply decreases

When cost of production decreases, producers are more willing and able to supply therefore supply curve shifts outwards or supply increases

Question 7

P
I
N
T
S
W
C

Answer 7

Productivity: Productivity dec CoP inc inc S dec

Indirect tax: tax inc CoP inc S dec

Number of firms: more firms= more supply

Subsidy: inc Subsidy dec CoP

Weather: good weather inc Supply crops

Cost of production: CoP inc S inc