1.2.4 Supply

Question 1

What is Supply?

Answer 1

The ability and the willingness to provide a good or service at a particular price at a given moment in time

Question 2

Describe the movement along the supply curve from A to B

Answer 2

A contraction in supply, the quantity supplied falls because of a decrease in price

Question 3

Describe the movement along the supply curve from A to C

Answer 3

A movement from A to C is an extension in supply, the quantity supplied rises due to an increase in price

Question 4

Describe the shift from S1 to S2

Answer 4

A shift from S1 to S2 is a decrease in supply, because fewer goods are supplied at each and every price

Question 5

Describe the shift from S1 to S3

Answer 5

A shift from S1 to S3 is an increase in supply, as more goods are
supplied at each and every price

Question 6

List some conditions of supply

Answer 6

• Costs of production
• Price of other goods
• Weather
• Technology
• Goals of the supplier
• Government legislation
• Taxes and Subsidies
• Producer Cartels

Question 7

What causes a shift in the supply curve?

Answer 7

A change in any of the factors which affect supply

Question 8

What factors cause a shift in the supply curve?

Answer 8

• Profit motivation (when price falls, it becomes less profitable to supply the product, so firms reduce output)
• Costs of production (increase in production requires move investment in resources)
• Technology (leads to a fall in production costs and higher productive efficiency)