Topic 3 - Nature Of Supply

Question 1

Supply

Answer 1

Defined as the quantity of a good to service that firms choose to sell at any possible price in a given period

Question 2

A firm

Answer 2

An organisation that brings together factors of production in order to produce output

Question 3

A supply curve

Answer 3

A graph showing the quantity supplied of a good or service at any given price

Question 4

Competitive market

Answer 4

A market which individual firms cannot influence the price of the good or service they are selling, because of competition from other firms.

Question 5

Law of supply

Answer 5

States that a higher quantity of a good or service will be supplied at a higher price Ceteris Paribus

Question 6

Cartel

Answer 6

An agreement between firms in a market on price and output with the intention of maximising their joint profits.

Question 7

What are the conditions of supply

Answer 7

Productivity
Indirect tax
No. Of firms
Technology
Subsidy
Weather
Costs of production

Question 8

Price elasticity of supply (PES)

Answer 8

A measure of the sensitivity of the quantity supplied of a good or service to a change in price of that good or service.

Question 9

Equation for PES

Answer 9

🔼% Quantity supplied
———————————
🔼% price