Supply(Chapter 8)

Question 1

Definition of supply

Answer 1

the quantity of goods or services that producers are willing to offer for sale at various prices

Question 2

Market supply

Answer 2

The sum of all the individual supply curves of producers competing to supply a certain product

Question 3

Movements along supply curve

Answer 3

An extension in supply:
As the price of a product rises, the supply rises/ extends.
A contraction in supply:
As price of a product falls, the supply contracts.

Question 4

What does the supply curve show

Answer 4

It shows the quantity firms are willing and able to supply of that product will change as the price varies

Question 5

Conditions of supply

Answer 5

Increase in market supply:
- other products becoming less profitable
- a fall in the cost of employing FOP
- an increase in FOP
- improvements in capital
- Increase in business optimism
- Govt. providing subsides to producers/ or cutting taxes on profits
- other factors, eg. weather boosting crops.

Decrease in market supply:
- other products becoming more profitable
- a rise in the cost of employing FOP
- an fall in availability of FOP
- decrease in capital
- Fall in business optimism
- Govt. withdrawing subsides to producers/ or increasing taxes on profits
- other factors, eg. wars and natural disasters