Podcast
Questions and Answers
What is the relationship between the price of a good/service and the quantity supplied?
What is the relationship between the price of a good/service and the quantity supplied?
What happens to the quantity supplied when the cost of production rises?
What happens to the quantity supplied when the cost of production rises?
What is an example of related goods/services in supply?
What is an example of related goods/services in supply?
What is the effect of an increase in government/EU subsidies on supply?
What is the effect of an increase in government/EU subsidies on supply?
Signup and view all the answers
What is the effect of a fall in the number of sellers on supply?
What is the effect of a fall in the number of sellers on supply?
Signup and view all the answers
What is the effect of advances in technology on supply?
What is the effect of advances in technology on supply?
Signup and view all the answers
What is the definition of individual supply?
What is the definition of individual supply?
Signup and view all the answers
What is the definition of market supply?
What is the definition of market supply?
Signup and view all the answers
What causes a shift in supply?
What causes a shift in supply?
Signup and view all the answers
What is a cause of a shift in supply?
What is a cause of a shift in supply?
Signup and view all the answers
Study Notes
The Law of Supply
- The law of supply states that when the price of a good/service rises, the quantity supplied will also rise, and when the price falls, the quantity supplied will fall.
- There is a positive relationship between the price and quantity supplied.
Exceptions to the Law of Supply
- Movements and shifts in supply occur due to various factors.
Individual and Market Supply
- Individual supply refers to the quantity of a good/service supplied by individual suppliers at different prices.
- Market supply refers to the aggregate quantity supplied of a good/service by all suppliers in a market at different prices.
Factors that Cause a Shift in Supply
- Change in the cost of production: a rise in costs leads to less production with a given amount of money, while a fall in costs leads to more production with a given amount of money.
- Price of related goods/services: a change in the price of related goods/services can affect the supply of a good/service, as suppliers may allocate resources to more profitable products.
- Unplanned factors: positive and negative factors, such as weather, can affect the supply of agricultural products.
- Government/EU subsidies: an increase in subsidies leads to an increase in supply, as it incentivizes producers to increase output.
- Number of sellers: a change in the number of sellers affects the supply of a good/service, with more sellers leading to an increase in supply and fewer sellers leading to a decrease.
- Advances in technology: increases in technology can lead to increases in supply, regardless of the price, as the cost of production may be lower.
Movement and Shift
- Movement refers to a change in quantity supplied in response to a change in the price of the good itself.
- Shift refers to a change in supply at any given price, caused by factors other than a change in the price of the good.
- Supply can be fixed, such as a concert venue with a fixed number of seats, making it perfectly inelastic.
- In situations where supply is fixed, the supplier may be able to initially increase the quantity supplied in response to a price rise, but will eventually be limited by capacity.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Understand the Law of Supply, its relationship with price, and the exceptions. Learn about individual and market supply, movements, and shifts.
