IGCSE Economics: Supply

These flashcards cover key concepts related to supply in economics, including definitions, relationships, and shifts in the supply curve.

What is supply in economics?

Supply is the ability and willingness of firms to provide goods and services at given price levels.

What is the relationship between price and supply?

There is a positive relationship; as the price increases, the quantity supplied tends to rise.

What does 'quantity supplied' refer to?

Quantity supplied refers to the amount of good or service that suppliers will produce and sell at a given price.

What happens to supply when price increases?

A rise in price causes an extension or increase in the quantity supplied.

What is a contraction in supply?

A contraction in supply occurs when a fall in price causes a decrease in the quantity supplied.

What is the difference between market supply and individual supply?

Market supply is the aggregation of all supply at each price level per period of time.

What causes movements along a supply curve?

Movements along a supply curve are caused only by changes in the prices of a good or service.

What factors can cause a shift in the supply curve?

Shifts in supply are caused by changes in non-price factors such as time, weather, opportunity cost, taxes, innovations, production costs, and subsidies.

What effect do indirect taxes have on the supply curve?

Indirect taxes shift the supply curve upward or leftward due to increased production costs.

What indicates an increase in supply on a supply curve?

An increase in supply is shown by a rightward shift of the supply curve.