Supply (CH 9)

Question 1

Define Supply

Answer 1

Quantity of a good/service producers are willing and able to produce at a given price in a given time period

Question 2

State the Law of Supply

Answer 2

There is a direct relationship between price and quantity supplies. As price increases, quantity increase and vice versa

Question 3

Why is it that when Quantity increases, Price increases?

Answer 3

Suppliers PROFIT MOTIVE

Question 4

If Quantity goes up what does this mean?

Answer 4

That cost of production for suppliers goes up, therefore suppliers will want a higher price to cover the cost of production and to allow them to maintain a profit margin.

Question 5

PINTSWC

Answer 5

• Productivity
• Indirect Tax
• No. of firms
• Technology
• Subsidy
• Weather
• Cost of production. (travel, labour, oil, raw materials, utilities, regulation)

Question 6

What happens if there is a increase in cost of production?

Answer 6

This will shift the supply curve to the left as producers are less able to producer with higher cost of production at the same price