The determinants of the supply of goods and services Flashcards
1
Q
What is supply?
A
the quantity of a good or service that a producer is willing and able to supply on to the market at a given price in a given time period.
2
Q
If market price rises, what happens to supply curve
A
expansion along curve
3
Q
if market price falls, what happens to supply curve
A
contraction along curve
4
Q
what is market supply?
A
total supply brought to the market by producer at each price
5
Q
What causes a shift in market supply?
A
- Changes in the unit costs of production
• lower CoP supply more at each
price
• fall in exchange rate decrease
supply - Changes in technology
-Government taxes and subsidies and regulations
• indirect taxes- inward shift
• subsidies- outward shift
• regulations- inward shift - Changes in climate in agricultural industries
• good weather- outward shift - Changes in price of a substitute in production
- Number of producers in market and their objectives
• new business, supply increases
• business moves away to seeking higher share of market- supply increase, outward shift
6
Q
What is joint supply?
A
an increase or decrease in the supply of one good leads to an increase or decrease in supply of a by-product
