Supply Flashcards
(9 cards)
What is joint supply?
Two or more goods that derive from a single production process
What is individual supply?
It is the producer supply of a good or service
What is market supply?
All the producer supply to the market summed together
What is the law of supply?
As price falls, the quantity supplies descreases and vice versa. Supply slopes upwards to the right.
What causes an upward movement in supply?
An extension of quantity supplied due to a rise in the price of the product
What causes an downward movement in supply?
A contraction of quantity supplied due to a fall in the price of the product
Why does the supply curve slope upward?
Higher market prices motivate firms to supply more as they expect more profit
Producing more increases the marginal cost of production so firms need higher prices to cover these costs
What factors cause a shift in supply?
- Change in the costs of production eg: raw materials
- Change in production technology
- Change in weather/climate
- Events such as strikes
- Changes in indirect taxes
- Changes in producer subsidies
- Changes in producer subsidies
- Changes in the price of subsidies in production
- Changes in the number of firms supplying to the market
What is the equilibrium?
A state of rest
