Suplpy

Question 1

What is the definition of supply?

Answer 1

The quantity of a good/service that producers are willing and able to supply at a given price over a given time period.

Question 2

What’s is the law of supply ?

Answer 2

There is a direct relationship between price and quantity supplied. As price increases quantity supplied increases and vice versa (ceteris paribus)

Question 3

Profit motive (why is supply curve downward sloping ?)

Answer 3

As price increases firms increase the quantity supplied to maximise on profits. As quantity supplied increases firms’ costs of production increase. This leads to firms raising their prices to cover costs of production to allow the to maintain profit margins.

Question 4

Other (non price factors )affecting supply

Answer 4

These, like demand result in a shit of the supply curve
- productivity
- indirect tax
- number of firms
- technology
- subsidy
- costs of production

Question 5

What is competitive supply?

Answer 5

A rise in the price of one product will cause the supply good to extend and the supply of a product in competitive supply will decrease.

Question 6

What is join supply?

Answer 6

A rise in the price of one product will cause the supply of that product to extend and the supply of a good in joint supply to increase.