SUPPLY AND SUPPLY CURVE Flashcards
SUPPLY
Quantity of g/s producers are willing and able to produce at a given price in a given time period
Law of supply
there’s a direct relationship between price and quantity supplied
As price increase Q S increase
When thinking of law of supply we say
ceteris paribus
supply being upward slopig indicates
direct relationship
cetris paribus isolates
movemts related to price
As price increase from P1 - P2 , explain what happens with supply
3 marks
QS increases
move upwards the supply curve
which is an extension of supply
as price decrease from p1 - p3 what happens with supply
3 marks
QS decreases
as we move down the supply curve
which is a contraction of supply
we move along curve to demo
law of supply
what two reasons do producers supply more when price goes up
profit motive private producers have + COP
explain profit motive when price increases for suppliers
If price goes up potentially more profit to be made if able to produce and sell more
so strong incentive to supply more to make profit
explain COP motive to increase supply when price increases
3 marks
when q goes up supplier want higher price
as cop go up for suppliers to produce extra unit
so want higher price ot cover COP to allow em to maintain profit margins
draw supply curve being affected by price
x axis - Q
Y - price
P1-P3 SHIFT
Q1- Q3 shifts
extension upwards + arrow
contraction downward + arow
non price factors do what to supply
shift indepndent of price
what influences willing + ability in supply
COP
explain how lower COP influences willing + ability
2 marks
willing at same price to supply more as if you supply extra unit
reduction in costs mean can cover COP at same price easily -
Increase in COP shift supply left as
producers less willing and able to produce with their COP at same price
Acronym for non price supply shifters
PINTSWC
P in PINTSWC
productivity
I in PINTSWC
indirect tax
N in PINTSWC
number of firms
T in PINTSWC
technology
S in PINTSWC
subsidies
W in PINTSWC
weather
C in PINTSWC
COP
Explain how productivity can shift labour supply to the right
labour/capital
workers become more productive (producing more) + paid sme in give time period reducing COP shifting supply to right.
draw a decrease in prodcutivity + explain
cost of production increase as paying workers same amount but producing less in given time period
shifting supply to left from S1 - S3 and reducing Q produced
whats indirect tax
tax on production that firms have to pay
explain how implemetned indirect atx on firms affects supply curve
increases COP
supply curve shifts to left
QD decreases
explain how a high number of firms entering mkt affects supply curve
more supply in mkt
supply curve shifts right from S1 - S2
technology massivley affects COP t/f
t
explain effect of improvement in tech on supply curve
reduces COP as maybe don’t need to pay labour shifting supply right ,
whats a subsidy
money grant give n by gov to producers to lower COP and encourage increase in output
if i take away or decrease subsidy explain effect on supply
COP increase then supply shifts left from S1 -S3 and Q decreases
explian effect on good weather
allows supply to increase shifting supply to right from S1 - S2 and increasing quantity
what are the 6 cop
transport
oil
utilities
raw materiasl
labour
regulation - health and safety or environmentla laws
draw on graph what happens if labour COP increases
cop increases
shift supply left
reduce QD
what affects COP
PITS
HOW DO WE rember WC in pints wc
when we drink lots of pints we neeed the WC hahahakakak
