(PAPER 1) 1.2.2 Supply

Question 1

supply definition

Answer 1

the amount of a good or service that producers are willing and able to supply at a given price, at a given time

Question 2

supply curve definition

Answer 2

the line drawn on a graph that shows how much of a good, sellers are willing to supply at a different price.

Question 3

difference between supply and demand on a graph

Answer 3

supply: demand:
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Question 4

indirect taxes definition

Answer 4

taxes that the government imposes on gods and services

Question 5

subsidy definition

Answer 5

a grant given to producers, usually to encourage production of a certain good

Question 6

reasons for change in supply

Answer 6

-changes in cost of production
>inc in supply: cost would lower-produce more for same cost
>dec in supply: cost would rise-produce less for same cost

-introduction of new technology
>inc in supply: more advanced machinery-quicker and effective-supply more
>dec in supply: technology becomes outdated-could break down

-indirect taxes
>inc in supply: rate of e.g. (VAT) to decrease-product would be cheaper
>dec in supply: increase of indirect tax would decrease supply

-government subsides
>inc in supply: more subsides being offered
>dec in supply: fewer subsides being made

-external shocks