Supply

Define supply

The quantity of a good or service which firms plan to sell at a give price in a given time period

Why is the supply curve upward sloping

as the prices of a good or service increases, a firm is more willing and able to supply more of a good or service

What causes an extension along the supply curve

A price increase of a good —> firms are more willing/able to supply at a higher price —> increase in quantity supplied —> extension along the supply curve

What are the 6 determinants of supply

1. Cost of production

2. Technical progress

3. Taxes

4. Subsidies

5. Joint supply

6. Competing supply

How does the cost of production effect supply

cost of production = workers, raw materials etc.

increased cop —> cost per unit increases —> less willing/able to produce at a given price —> profit margins fall and supply shifts inwards

How do technical progress effect supply

technical progress = machinery becoming more productive and efficient

improved technology —> cost per unit falls —> more willing/able —> supply shifts out

How do taxes affect supply

increased taxation —> increase cost per unit —> less willing/able to produce at a given price —> supply shifts inwards

How do subsidies affect supply

shifts supply outwards

How does joint supply affect the supply curve

increase supply of the by-product will also shift supply of other good outwards e.g. lambs for meat and wool

what is joint supply

where the supply of one good leads to supply of another as one is a by-product of the other

What does it mean by competing supply

when a supply of a product can be used for different purposes such as the supply of wheat for food or biofuels

how does competing supply affect the supply curve

As demand for one good goes up, the supply for it will go up to satisfy it, leaving the competing good’s supply diminished