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What does the Latin phrase Ceteris Paribus mean in economics?
It means 'all else equal' and is used to analyze the relationship between price and quantity supplied while ignoring other factors.
How does a change in quantity supplied occur?
It occurs solely when the price of the good changes.
What happens to the quantity supplied of pizza if its price increases?
The quantity supplied will increase, moving along the same supply curve.
What is a change in supply?
A change in supply occurs when factors other than the price of the good change, leading to a shift in the entire supply curve.
What are the five factors that can shift the supply curve?
Input Prices 2. Productivity 3. Prices of Related Goods 4. Size of the Market 5. Expectations About the Future.
What effect does an increase in input prices have on the supply curve?
It raises marginal costs and causes the supply curve to shift left (decrease in supply).
What effect does a decrease in input prices have on the supply curve?
It lowers costs and shifts the supply curve right (increase in supply).
How does productivity affect supply?
Improvements in productivity lower production costs, shifting the supply curve to the right (increase in supply).
What is the effect of higher prices for substitutes in production on supply?
Suppliers will produce less of the original good, shifting supply left.
What happens if firms exit the market?
Supply decreases, shifting the supply curve left.
How do expectations about future prices affect current supply?
Expectations of higher future prices lead suppliers to withhold supply today, shifting the supply curve left.
Why is understanding shifts in the supply curve important?
It is crucial for analyzing seller behavior and market dynamics.
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