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What is Supply?
The quantity of a good or service producers are willing and able to sell at different prices in a specific time period.
What is the Law of Supply?
As price increases, quantity supplied increases, and vice-versa (positive relationship).
Define 'quantity supplied'.
The amount of a good or service that producers are willing to sell at a specific price.
What is a supply curve?
A graphical representation of the relationship between price and quantity supplied, upward sloping.
What are resource costs?
The expenses incurred by a business when using economic resources to produce goods and/or services.
What are subsidies?
Government financial support to producers, lowering production costs and increasing supply.
Define 'technology' in the context of supply.
Improvements in production methods that allow more output with the same resources, increasing supply.
What are producer expectations?
Beliefs about future prices that influence current supply decisions (e.g., expecting higher prices later may decrease supply now).
What is market equilibrium?
The point where supply and demand intersect, determining market price and quantity.
Define 'change in quantity supplied'.
Movement along the supply curve due to a change in price.
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.
How does increased labor cost affect the supply of cars?
Increased labor costs increase production costs, decreasing the supply of cars (shifts left).
How does a new robot in a factory affect the supply curve?
A new robot (improved technology) increases productivity, increasing supply (shifts right).
How does a tax on cigarettes affect the supply of cigarettes?
A tax increases production costs, decreasing the supply of cigarettes (shifts left).
How does a subsidy to electric car manufacturers affect the supply of electric cars?
A subsidy lowers production costs, increasing the supply of electric cars (shifts right).
If coffee bean farmers expect prices to rise next month, how might this affect the coffee supply today?
Farmers may decrease supply now to sell more at higher prices later (shifts left).
How does an increase in the number of wheat farmers affect the supply of wheat?
More farmers mean more supply, increasing the supply of wheat (shifts right).
A new regulation increases the cost of producing paper. How is the supply of paper affected?
The supply of paper decreases, shifting the supply curve to the left.
A fishing boat is able to catch more fish due to new equipment. How is the supply of fish affected?
The supply of fish increases, shifting the supply curve to the right.
The government imposes a tax on sugar. How does the supply of candy change?
The supply of candy decreases, shifting the supply curve to the left.
The government provides a subsidy to producers of solar panels. How does the supply of solar panels change?
The supply of solar panels increases, shifting the supply curve to the right.