2.4 Supply

Question 1

Define Supply

Answer 1

The want and willingness of producers to supply a good or services at a given price

Question 2

Define the law of supply

Answer 2

There is a positive relationship between price and supply

Question 3

What factor causes a movement along the supply curve?

Answer 3

Price

Question 4

What happens to a supply curve when price increases?

Answer 4

Extension in supply curve

Question 5

What happens to a supply curve when price decreaes?

Answer 5

Contraction in supply curve

Question 6

What are 3 factors that cause a shift in supply curve?

Answer 6

• Changes in cost of production
• Technological Changes
• Profitability of other products

Question 7

Explain how changes in cost of production causes supply to shift

Answer 7

When cost is lower, producers can produce and supply more, thus supply curve moves to right; vice versa.

(eg. a subsidy reduces cost of production)

Question 8

Explain how technological changes causes supply to shift

Answer 8

New technology will increase the ability to produce more products, thus supply shifts to the right

Question 9

Explain how the profitability of other products causes supply to shift

Answer 9

If another product is seen as more profitable, producers will produce the other product, thus there is a lower supply for the current one, causing supply curve to shift to the left; vice versa