the concept of supply

Question 1

define supply

Answer 1

supply is the amount fo good or service hat produceres are willing and able to sell at a particular price at a particular time

Question 2

what is the law of supply

Answer 2

“as the price of a good rises, the quantity supplied will also rise”

Question 3

what is the economic reason for the law of supply

Answer 3

rational self interested producers would prefer to sell their goods at a high price than at a low price

Question 4

what are the 6 non price factors effecting supply

Answer 4

• technology
• cost of production
• events affecting the availability of resources and the supply chain
• changes in supply
• number of seller and suppliers
• expected future prices

Question 5

describe the non price factor technology

Answer 5

if technology improves then, mor output can be produced from the same quantity of resources. this then means that the firms cost of production will fall and with all things equal, an improvenment in technology will result in an increase in supply.

Question 5

what will happen to the supply curve when techonolgy improves

Answer 5

it will shift to the right

Question 6

decribe the non price factor of cost of production

Answer 6

the price of resources such as labour, capital and raw materials determines the firm’s costs of production. an increase in production costs will mean that for the given price, the frim will decrease its production.

Question 7

what will happen to the supply curve in relation to cost of production

Answer 7

the supply curve will shift to the left

Question 8

describe the non price factor number of sellers

Answer 8

if new sellers enter the market, then market supply will increase. sellers will be more inticed to enter a market if the profit opportunities are strong, but when more sellers joing the market it creates more comeptition which usually results in the fall of market price.

Question 9

what will happen to the supply curve in relation to nember of sellers

Answer 9

when new sellers eneter the market- shift to the right
when sellers exit the market - shifts to the left

Question 10

describe the non price factor of expectations of producers

Answer 10

if a higher price is expected in the future, then firms will decrease their current supply in order to take advantage of future higher prices.

Question 11

describe the non price factor of prices of other goods

Answer 11

production is the sprocces of coming productive resoources to produces the final good.The same resource can be used to produce other goods, which mena the producer will moniter moevenments in the prices of the goods they are capable of supplying so they can take adavntage of profit opportunities.2