Supply

What is supply in economics?

Supply is the quantity of a good or service that a producer is willing and able to supply onto the market at a given price over a specific period of time.

What does the Law of Supply state?

The Law of Supply states that when the price of a product rises, businesses may expand or reallocate their factors of production.

How does an increase in market price affect business output?

When market price rises following an increase in demand, it becomes more profitable for businesses to increase their output.

What happens to production costs when output increases?

When output increases, a business's production costs tend to rise, which requires a higher price to cover these costs.

How can higher prices affect market entry for other businesses?

Higher prices might incentivize other businesses to enter the market, leading to an increase in total supply.

What is the shape of the supply curve?

The supply curve is upward sloping, indicating that as price increases, the quantity supplied also increases.

What does the mnemonic PINTSWC represent in terms of supply?

PINTSWC represents the factors that shift the supply curve: Prices of related goods, Indirect taxes, Number of firms, Technology, Subsidies, Weather, and Costs of production.

How do prices of related goods impact supply?

Changes in the price of related goods (substitutes) can affect supply.

What effect do indirect taxes have on supply?

Indirect taxes on production can increase costs and reduce supply.

What is the impact of an increase in the number of firms in a market on supply?

More firms in the market generally increase supply.

How does technology influence supply?

Improvements in technology can make production cheaper and increase supply.

What role do subsidies play in supply?

Subsidies provide financial support that can encourage firms to supply more.

How does weather affect agricultural supply?

Good weather can improve agricultural supply, while bad weather can reduce it.

What happens to supply when production costs increase?

Higher production costs can lead to a decrease in supply.