Th1.2: Conditions of Supply

Question 1

What is the first condition of supply?

Answer 1

cost of production - if business have decrease in costs, supply curve will shift right

Question 2

What is the second condition of supply?

Answer 2

price of other goods - joint supply, where production of one good automatically causes production of other goods e.g production of beef and leather

Question 3

What is the third condition of supply?

Answer 3

weather - e.g if weather is good more crops can be harvested

Question 4

What is the fourth condition of supply?

Answer 4

technology - if new tech is introduced then there will be fall in production costs, leading to curve shifting right

Question 5

What is the fifth condition of supply?

Answer 5

goals of the supplier - e.g if motivated by helping society they may increase supply even though it doesn’t provide extra profit

Question 6

What is the sixth condition of supply?

Answer 6

government legalisation - high levels of regulation may increase costs and therefore decrease supply

Question 7

What is the seventh condition of supply?

Answer 7

taxes and subsidies - tax decreases supply, subsidy increases supply

Question 8

What is the eighth condition of supply?

Answer 8

Producer cartels - firms or countries may come together in order to decrease supply and increase price

Question 9

What are the eight conditions of supply in order?

Answer 9

cost of production
price of other goods
weather
technology
goals of the supplier
government legalisation
taxes and subsidies
producer cartels