Supply- 1.2.2

Question 1

What is supply?

Answer 1

The quantity of a good or service that a producer is willing and able to make available on the market at a given price.

Question 2

What factors affect supply?

Answer 2

1) Price paid by customers
2) Cost of production
3) new technology
4) subsidies
5) indirect tax
6) external shocks

Question 3

What is subsidies?

Answer 3

This is a payment from government to encourage more suppliers to enter the market. This increases supply causing costs to decrease.

Question 4

What is a result of a business being given subsidies?

Answer 4

Decrease production costs, so they can charge lower prices, making them more competitive, therefore gaining more sales