chapter 8 - supply Flashcards
(25 cards)
What is supply?
The quantity of a good or service that producers are willing and able to sell at a given price in a given time period
State the Law of Supply.
As the price of a good rises, the quantity supplied increases, ceteris paribus
What does “ceteris paribus” mean in the context of supply?
All other factors remain constant.
What does a supply curve show?
The relationship between price and quantity supplied
What is the typical slope of a supply curve?
Upward-sloping from left to right
What causes a movement along the supply curve?
A change in the price of the good itself
What causes a shift in the supply curve?
A change in non-price factors such as production costs or technology.
Give two non-price factors that affect supply.
Cost of production and technology
How does a decrease in production costs affect supply?
It increases supply (shifts to the right)
How does improved technology affect supply?
It increases supply by making production more efficient
How do taxes affect supply?
Higher taxes reduce supply, lower taxes increase supply
How do subsidies affect supply?
Subsidies increase supply by reducing production costs
What is a change in quantity supplied?
A movement along the supply curve due to a change in price
What is a change in supply?
A shift of the entire supply curve due to non-price factors
What effect does weather have on agricultural supply?
Good weather increases supply, bad weather decreases it
How do future price expectations affect current supply?
If prices are expected to rise, producers may reduce current supply to sell later
What is the market supply?
The total quantity supplied by all producers in the market
What is an individual supply schedule?
A table showing different quantities and individual producer will supply at various prices
What is a market supply schedule?
A table showing total quantities all producers will supply at various prices
How does the number of producers affect supply?
More producers increase supply, fewer producers decrease supply
What is productivity?
The output per unit of input, which affects supply
How does increased productivity affect supply?
It increases supply by making production more efficient
What is the relationship between cost of raw materials and supply?
Higher raw material costs reduce supply
What happens to supply if regulations become stricter?
Supply may decrease due to higher compliance costs.
