1.2.3 The determinants of the supply of goods and services

PPF

Production Possibilities Frontier, a curve that shows the maximum feasible amount of two goods that can be produced with available resources.

D

Demand, the quantity of a good or service that consumers are willing and able to purchase at various prices.

P

Price, the amount of money required to purchase a good or service.

Q

Quantity, the amount of a good or service.

Supply Curve

A graph showing the relationship between price and quantity supplied.

Determinants of Supply

Factors that affect the supply of goods and services, leading to shifts in the supply curve.

Producers

Individuals or entities that create and supply goods and services.

Supply

The total amount of a good or service that is available for purchase.

Price Elasticity of Supply

The responsiveness of the quantity supplied to a change in price.

Movement along the Supply Curve

A change in the quantity supplied resulting from a change in price.

Shift in the Supply Curve

A change in supply due to factors other than price, moving the entire curve to the left or right.

Government Subsidies

Financial support from the government to encourage production of a good or service.

Indirect Taxes

Taxes imposed on goods or services, increasing production costs.

Production Costs

Costs incurred in the production of goods and services, including wages, raw materials, and energy.

Wage Costs

The total amount paid to workers, influencing the cost of production.

Raw Materials

The basic materials used in the manufacturing of goods.

Energy Costs

Expenses related to the energy used in production.

Climatic Conditions

Weather factors that can significantly affect agricultural supply.

Technological Progress

Advancements that improve production efficiency, reducing costs and increasing supply.

Price of Substitute Goods

The cost of alternative goods that can affect the supply decisions of producers.

Market Objectives of Suppliers

The goals that producers aim to achieve, influencing their supply behavior.

Expectations

Producers' forecasts about future market conditions which can impact supply decisions.

Shift to the Right

An increase in supply indicated by the rightward movement of the supply curve.

Shift to the Left

A decrease in supply indicated by the leftward movement of the supply curve.

Boom Period

A phase of significant economic growth, often leading to increased supply.

Hi-tech Economy

An economy characterized by the use of advanced technology, influencing production capabilities and supply.

High Inflation Economy

An economic condition where prices rise rapidly, affecting supply and production costs.

Impact of Taxes on Supply

Taxes increase production costs, leading to decreased supply.

Impact of Subsidies on Supply

Subsidies lower production costs, resulting in increased supply.

Graphing Supply Curves

The process of plotting price on the y-axis and quantity on the x-axis to illustrate supply dynamics.

Less Supply

A situation where the quantity supplied decreases as shown by a leftward shift in the supply curve.

Increased Supply

A situation where the quantity supplied increases as indicated by a rightward shift in the supply curve.

Supply Curve Characteristics

Typically upward sloping, indicating higher prices lead to greater quantities supplied.

Output Reduction

A decrease in production levels often due to increased production costs.

Supply Curve Movement

Alterations along the supply curve due to price changes only.

Expectation Factors

Varieties of influences such as predicted future demand that affect producers' supply decisions.

Competition in the Market

The rivalry among sellers which influences their pricing and supply strategies.

Firms' Market Power

The control that firms possess in setting prices and influencing supply in a particular market.

Global Supply Factors

External influences that affect the overall supply of goods and services globally.