What is meant by the term supply?
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What is meant by the term supply?
Supply is the amount of a good or service that a producer is willing and able to supply at a given price in a given time period.
True or False?
A supply curve slopes downward.
False.
A supply curve slopes upwards as there is a positive relationship between the price and quantity supplied.
Define the term market supply.
Market supply is the combination of all the individual producers' supply for a good or service.
What is meant by the term ceteris paribus?
Ceteris paribus means that all other variables remain constant or unchanged.
How is an extension in quantity supplied shown on a graph?
An extension in quantity supplied is shown by a movement up the supply curve.
What does the term individual supply mean?
Individual supply represents the supply of one producer or firm.
What is meant by the phrase contraction in QS.
A contraction in QS is a decrease in quantity supplied, shown by a movement down the supply curve.
What does a supply curve show?
A supply curve is a graphical representation of the price and quantity supplied by producers.
Define the term profit-maximising producer.
A profit-maximising producer behaves rationally and wants to supply more as prices increase in order to maximise profits.
True or False?
An increase in price causes the supply curve to shift right.
False.
An increase in price causes a movement to the right along the supply curve (extension in quantity supplied).
What are the conditions of supply?
Conditions of supply are factors that shift the supply curve to the left or right.
Define a shift in the supply curve.
A shift in the supply curve occurs when the entire supply curve moves left or right due to changes in one of the conditions of supply.
Which condition causes supply to increase when it decreases?
When costs of production decrease, supply will increase (the supply curve shifts right).
True or False?
The implementation of a subsidy will shift the supply curve to the left.
False.
The implementation of a subsidy causes the supply curve to shift right. More is supplied at every price level.
True or False?
The implementation of an indirect tax will shift the demand curve to the right.
False.
The implementation of an indirect tax will shift the supply curve to the left. It is a condition of supply.
What is the impact of new technology on supply?
New technology increases productivity and lowers costs of production, so supply increases (shifts right).
How does the number of firms in a market affect supply?
If the number of firms increases, supply increases (shifts right). If the number of firms decreases, supply decreases (shifts left).
State the impact of unusual weather events on agricultural supply.
Weather events like droughts cause supply shocks and decrease supply in agricultural markets (supply shifts left) . Good weather increases supply (supply shifts right).
True or False?
An increase in the firm's labour costs will increase the costs of production, leading to an increase in supply.
False.
An increase in the firm's labour costs will increase the costs of production, leading to a decrease in supply (supply curve shifts left).
True or False?
An increase in the costs of production shifts the supply curve to the right.
False.
An increase in the costs of production shifts the supply curve to the left (decreases supply).
True or False?
The entry of new firms into a market decreases the supply of that good.
False.
The entry of new firms into a market increases the supply of that good (shifts the supply curve right).