What is individual supply?
Supply that a producer is willing and able to sell at a given price in a given period of time.
What is market supply?
The sum of all individual supplies in a market.
What are the 3 types of supply?
- Joint supply
- Composite supply
- Competitive supply
What is joint supply?
When increasing the supply of one good causes an increase or decrease in the supply of another good. For example, producing more lamb will increase supply of wool.
What is composite supply?
When a good or service can be obtained from different sources. For example, light can be produced from candles, electricity and gas.
What is competitive supply?
If raw materials producing the good in composite supply are perfect substitutes of each other, the sources of supply are in competition to satisfy a particular need or want. For example, if electricity and candles were substitutes, and cost the same to produce, they would compete to produce the good, light.
Why are supply curves upward sloping? [3]
- If price increases, it is more profitable for firms to supply the good, so supply increases.
- High prices encourage new firms to enter the market, because it seems profitable so supply increases
- With larger outputs, firm’s costs increase, so they need to charge a higher price to cover the costs.
What are the factors that shift the supply curve? [7]
- Productivity
- Indirect taxes
- Number of firms
- Technology
- Subsidies
- Weather
- Costs of production
How does productivity shift the supply curve?
Higher productivity causes an outward shift in supply, because average costs for the firm fall.
How do indirect taxes shift the supply curve?
It causes an inward shift in supply.
How do the number of firms shift supply?
The more firms there are, the larger the supply.
How does technology shift supply?
More advanced the technology causes an outward shift in supply.
How do subsidies shift supply?
They cause an outward shift in supply.
How does the weather shift supply?
Particularly for agricultural produce, favourable conditions will increase supply.
How do costs of production shift supply?
If costs of production fall, the firm can afford to supply more. If costs rise, such as with higher wages, there will be an inward shift in supply.
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1.1.1 the economic problem5
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1.1.2 business objectives13
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1.1.3 stakeholders and their objectives5
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1.2.1 role of an entrepreneur in the economy5
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1.2.3 factors of production6
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1.2.4 specialisation4
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1.2.5 the wider economic environment8
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1.3.1 demand13
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1.3.2 supply15
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1.3.3 price determination5
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1.3.4 price mechanism9
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1.3.5 understanding the consumer12
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1.3.6 the competition9
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1.4.1 role of banks in the economy9
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1.4.2 risk and liability4
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1.4.3 types and sources of credit + impact of credit within the economy22
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1.5.1 market failure and externalities12
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1.5.2 government intervention and failure7
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1.6.1 revenue and costs9
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1.6.2 relationship between revenue and costs6
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1.6.3 profits and loss10
