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Questions and Answers
As the price of a product decreases, the quantity supplied also decreases, ceteris paribus.
True
A decrease in production costs leads to a decrease in supply.
False
An improvement in technology leads to a decrease in supply.
False
The supply curve slopes downward, indicating that as the price increases, the quantity supplied decreases.
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A leftward shift in the supply curve represents an increase in supply.
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Individual supply refers to the total supply of all firms in a market.
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When goods are in surplus, price will tend to fall.
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Scarcity forces consumers to choose among several alternatives.
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Income inequality refers to the difference in income between the rich and the poor who are willing to buy the same goods.
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The Philippine Stock Exchange is a market where traders can buy and sell goods.
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If the price is above the equilibrium point, the quantity demanded is less than the quantity supplied.
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Purchasing power refers to the ability to produce goods.
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Macroeconomics is a branch of economics concerned with the study of individual firms.
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Porter's Five Forces Analysis focuses on the competitive forces at the national level.
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Economics is the study of how to create unlimited resources to satisfy human wants and needs.
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Study Notes
Price and Supply
Definition of Supply
- The amount of a product or service that producers are willing and able to produce and sell at a given price level during a specific period of time.
Law of Supply
- As the price of a product increases, the quantity supplied also increases, ceteris paribus (all other things being equal).
- This is because higher prices make it more profitable for producers to supply more.
Factors Affecting Supply
- Price: An increase in price leads to an increase in supply.
- Production Costs: A decrease in production costs leads to an increase in supply.
- Technology: An improvement in technology leads to an increase in supply.
- Expectations: If producers expect the price to rise in the future, they may be more likely to supply more now.
- Government Policies: Policies such as taxes, subsidies, and regulations can affect supply.
Supply Curve
- A graphical representation of the relationship between the price of a product and the quantity supplied.
- The supply curve slopes upward, indicating that as the price increases, the quantity supplied also increases.
Shifts in the Supply Curve
- A change in the supply curve, caused by a change in one of the factors affecting supply, other than price.
- An increase in supply is represented by a rightward shift, while a decrease in supply is represented by a leftward shift.
Types of Supply
- Individual Supply: The supply of a single firm or producer.
- Market Supply: The total supply of all firms in a market.
- Short-Run Supply: The supply of a product over a short period of time, during which some factors are fixed.
- Long-Run Supply: The supply of a product over a long period of time, during which all factors are variable.
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Description
Test your understanding of the concept of supply in microeconomics, including the law of supply, factors affecting supply, and the supply curve. Learn about the different types of supply and how they are affected by various factors.
