Supply and Supply Elasticity Flashcards

1
Q

Supply

A

The quantity of goods/services that a producer is willing and able to supply at each price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Law of supply

A

As the price decreases, the quantity supplied will decrease

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What does a movement along the supply curve mean?

A

A change in quantity supplied

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does a shift of the supply curve mean?

A

A determinant of supply has changed and so there is an increase or decrease of supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are the 5 determinants of supply?

A

GI T W C RG
Cost of factors of production, price of related goods, government intervention, changes in technology, weather/natural disasters

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Cost of production

A

As cost of production increases, firms will supply less goods at each price so supply curve shifts to left

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Price of related goods competitive supply

A

Goods are in competitive supply when producer can produce more than one product with available resources eg skis and snowboards

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Price of related goods joint supply

A

Goods are in joint supply if creating more of one leads to creating more of another ie wheat grain and straw

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Government intervention indirect taxes

A

Taxes on goods and services based of expenditure eg GST.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Government intervention subsidies

A

The government pays producers to reduce the price of good

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Changes in technology

A

Improvement in technology reduces the cost of production for goods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Weather or natural disasters

A

Impact production of goods especially primary goods so supply decreases (shift to left)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is the market supply of a good?

A

Found by summing up all of the individual producers supply at each price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Price elasticity of supply

A

The responsiveness of a firms willingness and ability to change the quantity supplied due to a change in price

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What are the two extremes of price elasticity of supply?

A

PES = 0 (supply is fixed so any change in price results in no change of Qs), PES=infinite (perfectly elastic, at the price set, supply is unlimited)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What happens when elasticity of supply is over 1?

A

Elastic, change in price causes a more than proportionate change in Qs

17
Q

What happens when ES = 1

A

Unitary elasticity

18
Q

What happens when ES is smaller than 1

A

Inelastic

19
Q

What are the 3 determinants of price elasticity of supply?

A

CT-STORE
How much costs rise when more is produced, time and ability to store stocks of goods

20
Q

How much costs rise when more is produced

A

If costs rise rapidly when more is produced, then will only supply more in large increase in price.

21
Q

Cost of production may not rise much further if the firm has

A

Unused capacity and mobile factors of production

22
Q

Time

A

The longer the amount of time, the more elastic the good will be

23
Q

Ability to store stocks of good

A

If you can store stocks of the good, then can easily supply more goods if price increases