Chapter 4, part 4 (supply)

Question 1

Law of supply

Answer 1

As the price rises for a good/service, then the quantity supplied will rise.When the price falls for a good/service, then the quantity supplied will fall.

Question 2

Individual supply…

Answer 2

refers to the quantity of a good or service supplied by individual suppliers at different prices.

Question 3

Market supply…

Answer 3

refers to the aggregate quantity of a good/service supplied by all suppliers at different prices

Question 4

Movement along the supply curve…

Answer 4

is caused by a change in the price of the good itself.

Question 5

Shift of a supply curve

Answer 5

is caused by a change in the price at any given price.

Question 6

Leftward shift (supply curve)…

Answer 6

indicates that supply has fallen at each price

Question 7

Rightwards shift (supply curve)…

Answer 7

indicates that supply has resent each price

Question 8

factors that cause a shift of the supply curve (6)

Answer 8

1-Change in the cost of production
2-price of related goods/services
3-Unplanned factors
4-Government/EU subsidies
5-Number of sellers
6-Advances in technology

Question 9

Exceptions to the law of supply (2)

Answer 9

1-Supply is fixed
2-The supplier is operating close to maximum capacity

Question 10

Equilibrium…

Answer 10

is a point where quantity demanded is equal to quantity supplied and there is no tendency for prices to change

Question 11

Functions/roles of the price mechanism in a market economy (3)

Answer 11

1-The signaling function-
2-The rationing function of the price mechanism.
3-Allocating resources