All Flashcards
Define 'Supply'.
The various quantities of a good/service firms are willing and able to produce at different price levels.
Define 'Quantity Supplied'.
A specific amount of a good/service produced at a particular price; a single point on the supply curve.
What is the Law of Supply?
There is a direct (positive) relationship between price and quantity supplied.
Define 'Determinants of Supply'.
Factors that cause the entire supply curve to shift (increase or decrease).
What does 'Resources' refer to in the context of supply?
The cost of inputs (raw materials, labor, etc.) used in production.
What does 'Other goods prices' refer to in the context of supply?
The price of alternative goods a firm could produce instead.
What does 'Taxes' refer to in the context of supply?
Government levies that increase the cost of production.
What does 'Technology' refer to in the context of supply?
The methods and processes used in production.
What does 'Expectations' refer to in the context of supply?
Suppliers' beliefs about future prices.
What does 'Number of competitors' refer to in the context of supply?
The quantity of firms in the market.
What does a rightward shift of the supply curve indicate?
An increase in supply.
What does a leftward shift of the supply curve indicate?
A decrease in supply.
On a supply curve graph, what causes movement along the curve?
A change in the price of the good itself.
On a supply curve graph, what causes the entire curve to shift?
Changes in the determinants of supply (ROTTEN).
If a supply curve shifts to the right, what happens to the equilibrium price, assuming demand remains constant?
The equilibrium price decreases.
If a supply curve shifts to the left, what happens to the equilibrium quantity, assuming demand remains constant?
The equilibrium quantity decreases.
Describe the shape of a typical supply curve.
Upward sloping, indicating a positive relationship between price and quantity supplied.
What does a vertical supply curve represent?
Perfectly inelastic supply; quantity supplied does not change regardless of price.
What does a horizontal supply curve represent?
Perfectly elastic supply; producers are willing to supply any quantity at a given price.
How does a technological advancement appear on a supply curve graph?
As a rightward shift of the supply curve.
How does a government subsidy to farmers affect the supply of agricultural products?
It increases the supply, shifting the supply curve to the right.
How do stricter environmental regulations on factories affect the supply of manufactured goods?
It decreases the supply, shifting the supply curve to the left.
What is the likely impact of a tax on imported goods on the domestic supply of those goods?
It reduces the domestic supply, shifting the supply curve to the left.
How does deregulation (removal of regulations) in an industry typically affect supply?
It increases supply, shifting the supply curve to the right.
How might a price ceiling (set below the equilibrium price) affect the quantity supplied?
It would decrease the quantity supplied, leading to a shortage.
How might a price floor (set above the equilibrium price) affect the quantity supplied?
It would increase the quantity supplied, leading to a surplus.
How does a tax on producers affect consumer prices and quantity sold?
It increases consumer prices and reduces the quantity sold.
What is the effect of import tariffs on domestic supply?
It decreases domestic supply and increases domestic prices.
How does a government-imposed quota on production affect the supply curve?
It shifts the supply curve to the left, limiting the quantity supplied.
How does a carbon tax on manufacturers affect the supply of goods?
It decreases supply, shifting the supply curve to the left, as production costs increase.