Topic 4.2 Supply

Question 1

Market supply

Answer 1

decisions of producers about how much of a product to provide at various prices!

Question 2

Define supply
3

Answer 2

Has money to produce it
Can profit from producing it
HAS A DEF PLAN TO PRODUCE AND SELL

Question 3

Define quantitiy supplied

Answer 3

How much of a good or service that the producer is WILLING AND ABLE to supply, with everyhting else being held constant

Question 4

Supply curve

Answer 4

Upwards sloping

AS THE PRICE OF THE GOOD RISES, SUPPLY INCREASES

Question 5

What does the grpah look like

Answer 5

UPWARD SLOPING
y axis has prices
x axis has quantitity supplied

Question 6

Supply scheudle:

Answer 6

table used to graph the supply curve!

Question 7

Law of supply
-explain

Answer 7

The quantitiy supplied of a good increases when the price of the good increases- people seek profit

curve results from the general tendency for the marginal cost of production to increase as the quantity produced increases (producers are only willing to supply good if they can cover at least the marginal cost of rpoduction)q

Question 8

Marginal cost formula

Answer 8

= Change in Total Cost/ Change in Quantity Demanded

OR THE SLOPE OF THE GRPAH!!!

=Rise/Run (same as opportuntiy cost)

Question 9

Marginal cost buer equivalent

Answer 9

marginal cost= seller
opportunity cost= buyer

Question 10

What is the lowest price at which a producer is willing to produce an additiona unit

Answer 10

AT LEAST the marginal cost (covering expenses of production)

Question 11

What happens to the lowest price a producer is willing to supply a good at when the quantiity increases

Answer 11

THIS LOWEST PRICE INCREASES TOO, bc increased marginal cost when increased leveels of production

Question 12

Market demand Market supply

Answer 12

Sum of markets demand
Sum of markets supply

Question 13

What causes supply curve to shift to the right?

Answer 13

INCREASE IN SUPPLY causes shifts to the right

Question 14

What causes supply curve to shift to the left?

Answer 14

A decrease in supply

Question 15

WHAT factors influence the amrket supply (SHIFTS IN CURVE)
6

Answer 15

Input prices

Expectations

number of producers in market

Price of Related goods

Technology

The state of nature

Question 16

WHAT factors influence the amrket supply (SHIFTS IN CURVE)
6

important diff in complement goods!!

Answer 16

Input prices= (FOP prices go UP= supply of good goes DOWN)
when land labour capital is too expensive then decreases profitability! decrease in supply

Expectations (expected price goes UP= supply of good today goes DOWN)

number of producers in market (# producers go UP= supply goes UP)

Price of Related goods (substitute price goes UP= supply of good goes DOWN)
(comp price goes UP= supply of good goes UP)

Technology= (TECH advancement go UP= supply GOES UP)

The state of nature (covid 19 etc)

Question 17

NEW NEW NEW NEW NEW NEW IDEA

Marginal cost curve explain- why does the supply curve increase

Answer 17

Suppliers are only willing to supply more if they can at least cover the marginal cost of the goods they are selling!!! that is why slope upwards

higher mc= higher prices to cover it