Supply

Question 1

What is the definition of supply

Answer 1

The quantity of a product that a firm is willing and able to supply to the market in a period of time

Question 2

Explain the relationship between price and supply and how is this shown on a market diagram

Answer 2

• As the price of a product increases, firms supply more because there is a greater profit incentive
• Change in price causes movement along supply curve

Question 3

Give 5 factors that cause a shift in supply

Answer 3

• Changes in prices of factors of production
• Changes in productivity
• Changes in tax and subsidies
• Weather shocks
• Changes in the number of firms in the market