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Questions and Answers
What does supply refer to in a market economy?
What does supply refer to in a market economy?
The amount of a good or service that producers are willing and able to offer to the market at various prices during a given period of time.
What are the three important points that apply to supply?
What are the three important points that apply to supply?
- Supply refers to what a firm offers for sale, not necessarily what is sold; 2) Supply requires both willingness and ability to supply; 3) Supply is a flow, identified for a specified time period.
Which of the following is a determinant of supply?
Which of the following is a determinant of supply?
- Price of the good (correct)
- Adverse weather conditions
- Marketing strategies
- Consumer preferences
If the price of Y rises, the quantity supplied of X will ______.
If the price of Y rises, the quantity supplied of X will ______.
Supply is not influenced by production costs.
Supply is not influenced by production costs.
What happens to supply when the prices of factors of production increase?
What happens to supply when the prices of factors of production increase?
How does an increase in the price of input such as raw materials affect supply?
How does an increase in the price of input such as raw materials affect supply?
In what way can the concepts of demand and supply determine price?
In what way can the concepts of demand and supply determine price?
Study Notes
Supply
- Supply refers to the amount of a good or service that the producers are willing and able to offer to the market at various prices during a given period of time.
- Supply is a flow, meaning it's measured over a specific time period, e.g., per day, per week, or per year.
- Supply is affected by the willingness and ability of producers to supply their product.
Determinants of Supply
- The price of a good: Higher prices incentivize producers to supply more; higher profits motivate supply.
- Prices of related goods: If prices of other goods rise, producers may shift resources to produce those goods instead, leading to a decrease in the supply of the original good. Example: A rise in comic book prices may lead to a decrease in novel production.
- Prices of factors of production: Increased input costs, like wages, raw materials, and interest rates, make production more expensive, resulting in decreased supply. Conversely, lower input costs can lead to increased supply.
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Description
This quiz explores the fundamental concepts of supply in economics, including its definition, flow, and the various determinants that affect it. Test your understanding of how price, related goods, and factors of production influence supply dynamics.
