Supply

Supply is the quantity of a good or service that a producer is willing and able to supply onto the market at a given price over a specific period of time.

Law of supply - when a price of a product rises the business may get bigger or factors are reallocated

• If market price rises following an increase in demand, t becomes more profitable, for business to increase their output

• When output increase a business production cost tend to rise therefore a higher price is needed to cover for these costs.

• Higher prices might be an incentive to other business to enter a market leading to an increase in total supply

Supply curve is upward sloping so directly proportional when price increases the quantity supplied increases

Factors that shift the supply curve

Mnemonic= PINTSWC Factors that shift the supply curve mnemonic: PINTSWC

• P: Prices of related goods (substitutes) - Changes in the price of other goods can affect supply.

• I: Indirect taxes - Taxes on production can increase costs and reduce supply.

• N: Number of firms - More firms in the market generally increase supply.

• T: Technology - Improvements in technology can make production cheaper and increase supply.

• S: Subsidies - Financial support can encourage firms to supply more.

• W: Weather (natural conditions) - Good weather can improve agricultural supply; bad weather can reduce it.

• C: Costs of production - Higher production costs can lead to less supply.