supplyw Flashcards
reasons for a decrease in supply
increase in the costs of production. decrease in productivity, subsidy removed, tariff imposed , indirect tax increased, price of a related good increases.
what is a subsidy?
A payment by the government to a firm to keep costs down so supply will increase and price decrease
Explain the relationship between the falling price of a good and the quantity of a good of a good supplied by a firm.
As the price of a good falls the quantity supplied falls because at a lower price the good is less profitable. The reason for this is due to lower revenues or the firm is less able to cover costs.
what is a quota?
the idea of a restriction or limit.
what is a tax on imported goods.
A tariff
explain how an environmental factor could directly influence a firms supply decisions
the use of environmentally friendly materials will increase costs so supply will decrease.
Explain how a change in the price of other related goods may affect supply.
Firms may have a choice of products they produce using the resources it has access to. A firm will tend to increase output of products that fetch higher prices and produce less of those that fetch lower prices.
describe the law of supply.
As the price of a good or service increases the quantity supplied increases ceteris paribus.
Define supply
Supply is the quantity producers are willing and able to sell and a rage of prices.
what is indirect tax?
A tax which is collected by a third party, who then passes it on to the govt.
possible economic consequences of an increase in supply for a firm
Resources will be moved away from less profitable products and in to more profitable ones. Revenue could rise due to more being sold at the same price. Hire new staff to cater for increased output.
explain how an increase in the level of technology will affect the supply of a product
supply is likely to increase because the increase in the level of technology will result in costs of production decreasing/ costs of production increasing as production becomes more efficient, therefore a greater quantity will be supplied at each and every price.
explain why a firm may not oincrease supply as a result of a decrease in the costs of production
The firm may find that other costs have increased or there are other goods that are more profitable. The owners may also decide to invest in capital.
Explain how a political factor could directly influence the supple decisions of a firm
A trade agreement negotiated by the govt. to promote free trade may encourage the firm to increase supply and take advantage of new markets.
Identify reasons for an increase in supply
Decrease in- COP new technology increase in productivity subsidy given tariff removed indirect tax lowered/ price of a related good falls
