- Economics 10

20/10/25 Supply

Define Planned Supply

Quantity of goods or services firms plan to produce and supply, at each given price level.

Define Actual Supply

Quantity of goods or services firms actually produce and supply, at each given price level.

What can you say about the relationship between price and quantity supplied

There’s a positive relationship between price and quantity supplied.

Define the Law of Economics / Law of Supply

Producers and sellers aim to maximise their profits.

Explain what higher profit does for producers

Higher profit provides an incentive to expand production and increase supply as price increases.

A price increase on a supply curve leads to _____ in supply

expansion (extension) in supply

A price decrease on a supply curve leads to _____ in supply

contraction in supply

What do price changes lead to on a supply curve, and what do they NOT lead to

Price changes cause movements along the S curve, NOT shifts in supply.

Define Conditions of Supply

Determinants of supply other than price, that shift the supply curve

List the Conditions of Supply

• Cost of borrowing

• Raw material costs

• Energy costs

• Wage costs

• Labour productivity

• Indirect taxes

• Subsidies

• Technology improvements

What is the acronym for the Conditions of Supply

CREWLIST

Define indirect tax

A tax on a good / service.

What can you say about how indirect taxes are paid

They’re paid for by firms, but passed onto consumers.

Give examples of indirect tax (3)

• Cigarette duty

• VAT

• Sugar tax

Define subsidy

A government grant given to firms, to reduce costs and encourage supply. It is a payment that is not returned.

Give examples of subsidies (as in, subsidised goods/services)

• Wind power

• Car plants