All Flashcards
How does a decrease in the cost of raw materials affect the supply of finished goods?
It increases supply, shifting the supply curve to the right.
How does the introduction of new, more efficient technology affect the supply curve?
It increases supply, shifting the supply curve to the right.
How do higher taxes on production impact the supply of a product?
It decreases supply, shifting the supply curve to the left.
If suppliers expect the price of their product to rise significantly in the future, how will they adjust their current supply?
They will decrease current supply, anticipating higher profits later.
How does an increase in the number of firms producing a good affect the market supply?
It increases the overall market supply, shifting the supply curve to the right.
If the price of corn increases, how will this affect the supply of ethanol (assuming corn is a major input)?
The supply of ethanol will decrease, shifting the supply curve to the left.
A new regulation requires factories to install expensive pollution control equipment. How does this affect supply?
Supply decreases, shifting the supply curve to the left, as production costs increase.
A coffee shop expects a major coffee bean shortage next month. How will this affect their current supply of coffee?
The coffee shop will likely decrease its current supply to save beans for the expected higher prices.
A new competitor enters the market for organic vegetables. How does this affect the individual supply of the existing farmers?
The individual supply of the existing farmers decreases as the market share is divided.
How would a government subsidy for electric car production affect the supply of electric cars?
It would increase the supply of electric cars, shifting the supply curve to the right.
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.