6 Supply

Question 1

Supply

Answer 1

the ability and willingness of a firm to sell products at a given price

Question 2

Individual supply

Answer 2

one business’s willingness and ability to sell a product at a given price

Question 3

Market supply

Answer 3

Sum of all businesses willingness and ability to sell a product at a given set of prices

Question 4

Supply curve

Answer 4

• relationship between the price of a product and the quantity supplied by businesses
• the higher the price the greater incentive for a business to supply products

Question 5

Joint supply

Answer 5

When products are supplies together, often as a byproduct

Question 6

Competitive supply

Answer 6

When producers choose to supply one or the other product with given factors of production

Question 7

extension of supply

Answer 7

increases in price which increases the quantity demanded

Question 8

contraction of supply

Answer 8

there is a decrease in price which decreases the quantity supplied

Question 9

increase in supply

Answer 9

• outward shift of supply curve
• at every price there is an increased quantity supplied

Question 10

decrease in supply

Answer 10

• inward shift of supply curve
• at every price there is a decreased quantity supplied

Question 11

Factors that shift the supply curve (the cost of labour)

Answer 11

• need labour to produce product
• cost of labour increases then the overall cost of production increases
• supply curve shifts to the left

Question 12

Factors that shift the supply curve (the cost of capital)

Answer 12

• businesses require capital to produce
• machinery, vehicles and cost of borrowing money
• cost of capital increases
• supply will decrease

Question 13

Factors that shift the supply curve (the cost of land)

Answer 13

• need land and raw materials
• need to be purchased or hired and so cost increases
• supply decreases

Question 14

Factors that shift the supply curve (technology)

Answer 14

• use technology in production process
• tech can improve a firms productivity
• as tech improves firms are able to produce more products for less money
• supply increases

Question 15

Factors that shift the supply curve (prices of jointly supplied products)

Answer 15

• price of a jointly supplied product increases
• make more profit
• supply of original increases

Question 16

Factors that shift the supply curve (prices of competitively supplied products)

Answer 16

• price of a competitively supplied product increases
• firm is likely to switch production to that profit (gain higher profit)
• reducing supply of original product

Question 17

Factors that shift the supply curve (taxation)

Answer 17

• if tax increases
• less incentive to supply products
• supply decreases

Question 18

Factors that shift the supply curve (subsidies)

Answer 18

• if subsidy increases
• encourage production of products
• supply increases