Supply and Producer Surplus

Question 1

Define Supply?

Answer 1

Supply is the quantity of a good or service that a producer is both willing and able to sell at a given market price during a given period of time

Question 2

Determinants of supply?

Answer 2

• Price of the good or service
• Cost of production
• Changes in technology
• Government policy (indirect taxation, subsidies)
• Weather conditions
• The relative profitability of other goods and services
• Expected prices

Question 3

Changes in the price lead to…(song)

Answer 3

Changes in the price lead to movements along, changes in the others lead to shifts, ceteris paribus

Question 4

What is a supply schedule?

Answer 4

It shows the relationship between price and quantity supplied

Question 5

What is producer surplus

Answer 5

It is the benefit gained by the producer. It is measured by the difference between the market price of the product and the minimum supply price.

Question 6

What is it called when there is a movement along?

Answer 6

An expansion or contraction in supply

Question 7

What is it called when there is a shift to the right or to the left?

Answer 7

An increase or decrease in supply

Question 8

Define producer surplus?

Answer 8

Producer surplus is the difference between the price a producer is willing to accept and the market price actually received