All Flashcards
What does an upward-sloping supply curve indicate?
A positive relationship between price and quantity supplied (Law of Supply).
What does a rightward shift of the supply curve indicate?
An increase in supply due to factors other than price (e.g., lower resource costs, subsidies, technological improvement).
What does a leftward shift of the supply curve indicate?
A decrease in supply due to factors other than price (e.g., higher resource costs, taxes).
On a supply curve graph, what is on the x-axis?
Quantity.
On a supply curve graph, what is on the y-axis?
Price.
How does a subsidy affect the supply curve?
It shifts the supply curve to the right.
How does a tax affect the supply curve?
It shifts the supply curve to the left.
What does a movement ALONG the supply curve represent?
A change in quantity supplied due to a change in price.
How does improved technology affect the supply curve?
It shifts the supply curve to the right.
How does an increase in the cost of raw materials affect the supply curve?
It shifts the supply curve to the left.
What is the difference between a 'change in supply' and a 'change in quantity supplied'?
A 'change in supply' is a shift of the entire curve due to determinants, while a 'change in quantity supplied' is a movement along the curve due to a price change.
Compare the effects of a tax and a subsidy on the supply curve.
A tax shifts the supply curve left (decreases supply), while a subsidy shifts it right (increases supply).
How do expectations of future prices affect supply vs. demand?
Expectations of higher future prices decrease current supply but increase current demand.
Differentiate between supply and demand.
Supply represents the quantity producers are willing to sell, while demand represents the quantity consumers are willing to buy.
How is a change in resource costs different from a change in technology?
A change in resource costs affects the expense of production, while a change in technology affects the efficiency of production.
How does the number of sellers affect supply compared to the size of each seller?
The number of sellers directly shifts the supply curve, while the size of each seller affects the magnitude of that shift.
What is the difference between a price floor and a price ceiling?
A price floor is a minimum price set by the government, while a price ceiling is a maximum price.
How do direct taxes differ from indirect taxes in their effect on supply?
Direct taxes (e.g., income tax) have a less direct effect on supply than indirect taxes (e.g., sales tax).
How does the elasticity of supply differ from the slope of the supply curve?
Elasticity is the responsiveness of quantity supplied to a change in price, while the slope is the rate of change of price with respect to quantity.
Compare the short-run and long-run effects of a technological advancement on supply.
In the short-run, supply increases. In the long-run, supply may increase further as more firms adopt the technology.
What is the impact of a tax on the supply of gasoline?
Decreases the supply of gasoline, leading to higher prices and lower quantity.
What is the impact of a subsidy on the supply of renewable energy?
Increases the supply of renewable energy, leading to lower prices and higher quantity.
How does a minimum wage impact the supply of labor?
It does not directly affect the supply of labor, but it can affect the quantity of labor supplied.
How does a carbon tax affect the supply of goods and services with high carbon emissions?
It decreases the supply of goods and services with high carbon emissions.
How does a government regulation requiring safer working conditions affect supply?
It likely decreases supply due to increased production costs.
How does a policy that increases access to education and training affect the future supply of skilled labor?
It increases the future supply of skilled labor.
What is the effect of rent control on the supply of apartments?
Rent control typically decreases the supply of apartments.
How does a tariff on imported steel affect the supply of steel in the domestic market?
It decreases the supply of steel in the domestic market.
How does a policy promoting free trade affect the overall supply of goods and services in a country?
It increases the overall supply of goods and services.
What is the impact of a price ceiling on the supply of a product?
A price ceiling can lead to a decrease in the quantity supplied, as producers may find it unprofitable to sell at the mandated low price.