Supply (Microeconomics) Flashcards
Define supply
The quantity of a good or service that a producer is willing and able to supply onto the market at a given price in a given time period.
What is the basic law of supply?
As price increases, the quantity of supply increases and vice versa, assuming ceteris paribus.
What does a supply curve show?
A relationship between market price and how much a firm is willing and able to sell.
What does a rise in the market price show?
An expansion of supply
What are the three main reason why supply curves are drawn as sloping upwards from left to right?
The profit motive
Production and costs
New entrants coming into the market
What does a fall in market prices show?
A contraction of supply
What is market supply and how do you calculate it?
• Total supply brought to the market by producers at each price.
•To calculate, sum the individual supply schedules.
Name four causes of shifts in the market supply curve.
•Advances in production technologies.
•The entry of new producers into the market.
•Favourable weather conditions.
•Taxes, subsidies and government regulations.
What is joint supply?
Where an increase or decrease in the supply of one good leads to an increase or decrease in supply of a by-product.
