Supply basics~1.2.4

Question 1

Define supply?

Answer 1

The quantity of a good/service producer is willing and able to produce at any given price in a given time period.

Question 2

Define law supply?

Answer 2

There is a direct relationship between price and quantity supplied. As prices increases, QS will increase and vice-versa.

Question 3

When prices increase how will this be impacted?

Answer 3

When prices are rising, the willingness of goods will rise because of the profit motive.

Question 4

When the quantity rises, how will this impact the cost of production?

Answer 4

The cost of production will rise since suppliers will want to cover the costs of CELLS and maintain profit margins.

Question 5

What are the non-price factors that will cause supply to shift?

Answer 5

Productivity
Indirect tax
No of firms
Technology
Subsidy
Weather
Costs of production

Question 6

How is productivity per labour a determinant of supply?

Answer 6

As productivity increases, workers are producing more supply will shift to the right and vice-versa.

Question 7

How is an indirect tax a determinant of supply?

Answer 7

As indirect tax increases, it will cause supply to shift to the left (tax on production) and vice-versa.

Question 8

How is the number of firms a determinant of supply?

Answer 8

More firms enter the market, there will be a higher production of goods and supply will shift to the right and vice-versa.

Question 9

How is technology a determinant of supply?

Answer 9

As there’s an improvement in Technology it will reduce CELLS and supply will shift to the right and vice-versa.

Question 10

How is subsidy a determinant of supply?

Answer 10

Money grants were given by governments to producers to lower CELLS and encourage more output so supply will shift to the right and vice-versa.