Supply and the Supply Curve Flashcards
What is supply?
The quantity of a good/service that producers are willing and able to producers at a given price in a given time period.
What is the law of supply?
There is a direct/positive relationship between price and quantity supplied?
Why does the supply curve slope upwards?
Due to the profit motive. As the price increases the profit motive increases acting as an incentive to producers to produce more.
What is an extension/expansion of supply?
When you move along the supply curve as supply increases because the price increases.
What is a contraction of supply?
When supply decreases by moving along the supply curve due to a decrease in price.
What do you do when the price of a good/service itself changes?
Move along the supply curve.
What do non-price factors do to the supply curve?
Shift it in or out
What factors can cause the supply curve to shift?
Productivity
Indirect tax
No. of firms
Technology
Subsidy
Weather
Costs of production
What acronym can be used to remember the supp,y curve shift factors?
PINTS W/C
Productivity?
Increase = shift supply out
Decrease = supply shift in
Indirect tax?
Place on or increase = supply shifts in
Taken away or decreased = supply shifts out
No. of firms?
More firms = shifts supply out
Less firms = shifts supply in
Technology?
Improves = shifts supply out
Outdated = shifts supply in
Subsidy?
Place on/increased = shifts supply out
Taken away/decreased = shifts supply in
Weather?
Bad = shifts supply in
Good = shifts supply out
