Supply

Question 1

What is supply?

Answer 1

Supply is the quantity of a good or service producers are willing and able to sell at a given price over a period of time.

Question 2

What factors can cause supply to change?

Answer 2

Costs of production, new technology, indirect taxes, government subsidies, external shocks.

Question 3

How do costs of production affect supply?

Answer 3

Higher costs reduce supply because it’s less profitable to produce. Lower costs increase supply.

Question 4

How does new technology affect supply?

Answer 4

New technology improves efficiency, reduces costs, and increases supply.

Question 5

How do taxes and subsidies affect supply?

Answer 5

Indirect taxes increase costs and reduce supply. Subsidies lower costs and increase supply.

Question 6

How do external shocks affect supply?

Answer 6

Events like wars or natural disasters can reduce supply by disrupting production.