3 Questions
Explain the law of supply and how it is represented by the supply curve in economics.
The law of supply states that there is a direct relationship between the price of a good and the quantity supplied by producers, ceteris paribus. As the price of a good increases, the quantity supplied by producers also increases. This relationship is represented by the upward-sloping supply curve in economics.
What are some factors that can cause a shift in the supply curve?
Factors that can cause a shift in the supply curve include changes in production costs, technology, prices of related goods, expectations of future prices, and the number of producers in the market. These factors can lead to an increase or decrease in the overall quantity that producers are willing to supply at any given price.
Discuss the concept of elasticity of supply and provide an example of a product with elastic supply.
Elasticity of supply measures the responsiveness of quantity supplied to a change in price. If the percentage change in quantity supplied is greater than the percentage change in price, supply is considered elastic. An example of a product with elastic supply is fresh produce, as farmers can quickly adjust their planting and harvesting decisions in response to changes in market prices.
Test your understanding of the law of supply and its representation through the supply curve in economics. Explore factors that can cause shifts in the supply curve and grasp the concept of elasticity of supply. Enhance your knowledge with a real-world example of a product with elastic supply.
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