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What does the law of supply state?
What does the law of supply state?
The law of supply states that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.
Which factors can cause a shift in the supply curve? (Select all that apply)
Which factors can cause a shift in the supply curve? (Select all that apply)
Alfred Marshall was the first to develop the standard supply and demand graph.
Alfred Marshall was the first to develop the standard supply and demand graph.
True
Market saturation occurs when the volume of a product or service in a marketplace has been ____.
Market saturation occurs when the volume of a product or service in a marketplace has been ____.
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Match the following concepts related to Equilibrium:
Match the following concepts related to Equilibrium:
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Define Price Elasticity of Supply.
Define Price Elasticity of Supply.
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What does the law of supply state?
What does the law of supply state?
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Which of the following factors influences the supply of a product? (Select all that apply)
Which of the following factors influences the supply of a product? (Select all that apply)
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Market saturation occurs when the volume of a product or service in a marketplace has been minimized.
Market saturation occurs when the volume of a product or service in a marketplace has been minimized.
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The ______ price is the price at which the quantity demanded equals the quantity supplied.
The ______ price is the price at which the quantity demanded equals the quantity supplied.
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Match the following types of supply with their descriptions:
Match the following types of supply with their descriptions:
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Study Notes
Law of Supply
- The law of supply states that as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.
- The law of supply is a microeconomic law that describes the relationship between the price of a good or service and the quantity supplied.
- The law of supply is depicted by a supply curve, which is always upward sloping.
Factors Affecting Supply
- Price: a increase in price leads to an increase in supply, ceteris paribus.
- Cost of Production: an increase in the cost of production leads to a decrease in supply, ceteris paribus.
- Natural Conditions: climatic conditions directly affect the supply of certain products.
- Technology: a better and more advanced technology increases the production of a product, leading to an increase in supply.
- Factor Prices and their Availability: the availability of inputs such as raw materials, manpower, equipment, and machines affects the supply of a product.
- Transport Conditions: better transport facilities increase the supply of products.
- Prices of Related Goods: the prices of substitutes and complementary goods also affect the supply of a product.
- Government's Policies: the government's policies, such as fiscal policy and industrial policy, affect the supply of a product.
Supply Curve
- The supply curve shows the direct correlation between the quantity supplied (Q) and the price (P).
- A shift to the left of the supply curve indicates a decrease in the overall supply, while a shift to the right indicates an increase in the overall supply.
Equilibrium
- Equilibrium is the point where the quantity demanded equals the quantity supplied.
- The equilibrium price is the price at which the quantity demanded equals the quantity supplied.
- Surplus occurs when the price exceeds the equilibrium price, while shortage occurs when the price is below the equilibrium price.
Shifts in the Equilibrium
- An increase in demand, ceteris paribus, causes the equilibrium price to rise, and quantity supplied to increase.
- A decrease in demand, ceteris paribus, causes the equilibrium price to fall, and quantity supplied to decrease.
- An increase in supply, ceteris paribus, causes the equilibrium price to fall, and quantity demanded to increase.
- A decrease in supply, ceteris paribus, causes the equilibrium price to rise, and quantity demanded to decrease.
Price Elasticity of Supply
- Elastic supply (PES>1): producers can increase output without a significant rise in cost or a time delay.
- Inelastic supply (PES<1): producers cannot increase output without a significant rise in cost or a time delay.
Law of Supply
- The law of supply states that as the price of a good or service increases, the quantity of goods or services that suppliers offer will increase, and vice versa.
- The law of supply is a microeconomic law that describes the relationship between the price of a good or service and the quantity supplied.
- The law of supply is depicted by a supply curve, which is always upward sloping.
Factors Affecting Supply
- Price: a increase in price leads to an increase in supply, ceteris paribus.
- Cost of Production: an increase in the cost of production leads to a decrease in supply, ceteris paribus.
- Natural Conditions: climatic conditions directly affect the supply of certain products.
- Technology: a better and more advanced technology increases the production of a product, leading to an increase in supply.
- Factor Prices and their Availability: the availability of inputs such as raw materials, manpower, equipment, and machines affects the supply of a product.
- Transport Conditions: better transport facilities increase the supply of products.
- Prices of Related Goods: the prices of substitutes and complementary goods also affect the supply of a product.
- Government's Policies: the government's policies, such as fiscal policy and industrial policy, affect the supply of a product.
Supply Curve
- The supply curve shows the direct correlation between the quantity supplied (Q) and the price (P).
- A shift to the left of the supply curve indicates a decrease in the overall supply, while a shift to the right indicates an increase in the overall supply.
Equilibrium
- Equilibrium is the point where the quantity demanded equals the quantity supplied.
- The equilibrium price is the price at which the quantity demanded equals the quantity supplied.
- Surplus occurs when the price exceeds the equilibrium price, while shortage occurs when the price is below the equilibrium price.
Shifts in the Equilibrium
- An increase in demand, ceteris paribus, causes the equilibrium price to rise, and quantity supplied to increase.
- A decrease in demand, ceteris paribus, causes the equilibrium price to fall, and quantity supplied to decrease.
- An increase in supply, ceteris paribus, causes the equilibrium price to fall, and quantity demanded to increase.
- A decrease in supply, ceteris paribus, causes the equilibrium price to rise, and quantity demanded to decrease.
Price Elasticity of Supply
- Elastic supply (PES>1): producers can increase output without a significant rise in cost or a time delay.
- Inelastic supply (PES<1): producers cannot increase output without a significant rise in cost or a time delay.
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Description
This quiz covers the concept of law of supply, its relation to the theory of production and costs, and how it affects the overall supply curve.
