Revision A.S 1.3 Supply Name_________________________

Words to be using in your exam answers for A.S 1.3 “Supply”

1.3 Supply Exam format 1. Law of supply 2. Change in supply – economic / internal factor 3. Change in supply – non economic / external factor

Flow-on effects Get them from the graph Supply↑ = more raw materials, labour, capital required Include additional costs, eg training new staff.

Flow-on effects For excellence, add to these a flow-on directly linked to the factor that has changed eg environmental factor Have to source an environmentally friendly packaging supplier, inc associated costs of doing so Advertise our new packaging and how it is enviro friendly, inc associated costs of doing so

Flow on effects Increase in SupplyDecrease in Supply May hire more workersMay need to lay off workers Resources may be used up faster may need to find another source May switch to producing a more profitable related good If profits increase, pay more tax to the government If profits decrease, pay less tax to the government Might invest in more capital equipment May need to sell off idle capital equipment

Externals overall A-M refer to the graph!!!!!! No Supply curve shifts to the right Yes Supply curve shifts to the right from S 1 to S 2 No Quantity supplied increases Yes The quantity of bacon supplied increases from 40kg to 50kg per day It’s a whole grade level

Define the following Words Profit______________________________ Revenue___________________________ Law of supply _____________________________ _________________________________________ Cost of production ________________________ ________________________________________ Productivity _________________________ Related Goods ____________________________ _____________________________________

Define the following Words Profit Revenue – Costs Revenue Price x Quantity Sold Law of supply As prices increase the quantity supplied increases vice versa ceteris paribus Cost of production Costs involved of getting the product ready to sell. Wages, electricity raw materials etc Productivity Output per unit of input Related Goods Goods that can be produced using similar resources

1. Using the supply schedule below construct a supply curve 2. Show the effect of an increase in the price from $2.50 to $3.50 Sam’s Weekly Supply Schedule for Sandwiches Price ($)Quantity Supplied Explain how the changes you made in Q2 demonstrates the law of supply ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ___________________________________________________________________________ ______________________________________________________________________

1. Using the supply schedule below construct a supply curve 2. Show the effect of an increase in the price from $2.50 to $3.50 Sam’s Weekly Supply Schedule for Sandwiches Price ($)Quantity Supplied Explain how the changes you made in Q2 demonstrates the law of supply The law of supply states that as price increases the quantity supplied increases vice versa ceteris paribus. As the price of sandwiches increases from 2.50 to 3 the quantity supplied increased from 120 to 180 sandwiches. This is shown as a movement along the supply curve. The reason for this is as prices increase the good becomes relatively more profitable so quantity supplied increases. Sam’s weekly supply curve for Sandwiches Quantity supplied (ea) Price $ S P1 Q1 P2 Q2

1.Using the axis provided draw Cameron's weekly supply curve for ginger beer. Fully label your graph 2.Show the effect of a price decrease from $8.50 to $7.00

What the examiners are looking for ………. 1. Title (Cameron, weekly, Ginger Beer), AXIS - even scales, units ($, bottles), LABLE- axes labelled (Price, Quantity supplied), curve labelled S. LINE - correct points 2. Movement along the supply curve: changes indicated by (dotted) lines P, P 1, Q, Q 1 labels OR arrows.

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The law of supply is when price increases, quantity supplied increases, vice versa, ceteris paribus. When the price of ginger beer decreased from $8.50 to $7.00 Cameron's quantity supplied of ginger beer decreased from 115 to 80 bottles. As the price of Ginger Beer falls, selling ginger beer becomes less profitable for Cameron since the revenue is lowered and Cameron is less able to cover the costs. Therefore Cameron will want to decrease the quantity (of ginger beer) supplied in order to maximise profits. If the price falls below $4, Cameron is unlikely to be able to cover any of the costs of his ingredients and time so supplying ginger beer is even less profitable. He will subsequently reduce his quantity supplied or even shut down his operations. Cameron may divert his resources to a related good such as fruit juice which may be relatively more profitable.

Changes in Supply Name the four economic factors that will cause a movement of the supply curve T_____________________________________ C____________________________________ P_________O_____R___________G_________ P___________________________________ Name the five non economic factors that will cause a movement of the supply curve E_________________________________________ P________________________________________ C________________________________________ T________________________________________ L_______________________________________

Changes in Supply Name the four economic factors that will cause a movement of the supply curve Technology Cost of production Price Of Related Goods Productivity Name the five non economic factors that will cause a movement of the supply curve Environmental Political Cultural Trade Legal

Show the effects on the supply of pizza on the graphs below due to the following changes and state what factor has changed Increase in electricity Prices S S Decrease in wages S Increase in the price of cheese S Purchase of a quicker oven S Increase in the price of toasties S Health and safety requirements increase Factor _______________

Show the effects on the supply of pizza on the graphs below due to the following changes Increase in electricity Prices S S Decrease in wages S Increase in the price of cheese S Purchase of a quicker oven S Increase in the price of toasties S Health and safety requirements increase S1 Factor _______________ Cost of Production Productivity /TechnologyRelated GoodCost of production (Legal)

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Relationship between ginger beer and apple juice: Ginger beer and apple juice are related goods for Cameron. Related goods are goods that can be produced using similar resources. In this case ginger beer and apple juice may use similar resources such as bottles and vats. A flow-on effect: Cameron may have to produce new labels for his apple juice bottles / source different ingredients, ie apples for juicing / change his advertising towards apple juice / switch existing workers from ginger beer to apple juice production which may involve retraining workers. If Cameron’s workers are not skilled in apple juice production, he may have to lay off those workers and employ workers specifically trained in apple juice production. Lower prices of ginger beer will mean Cameron will switch his resources from the production of ginger beer to the production of apple juice, hence increasing supply of apple juice at each and every price. With ginger beer being less profitable, this has made apple juice relatively more profitable than ginger beer, so Cameron will have an incentive to supply more apple juice. This is shown as a shift of the supply curve of apple juice to the right from S to S 1.

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The legal factor requires Cameron to comply with the food safety standard which will increase Cameron's cost of production. This is because Cameron will need to purchase special equipment such as label makers and sterilisers to ensure the drinks he makes meet the safety standard. This will make ginger beer less profitable thus reducing supply as shown by a shift of the supply curve to the left from S to S 1 which indicates Cameron supplies fewer bottles of ginger beer at each and every price. Flow-on effects: Examples include: Cameron may have to lay off workers since they can no longer be afforded with these extra costs. Cameron might choose to do another activity with his time and resources that is more profitable, he may have to find alternative work or product to supply that does not require such compliance costs such as supplying ginger beer potential business closure as the cost of compliance becomes too high, potential to use the legal requirement as a marketing tool (eg high standards of food safety) and therefore increasing competitiveness and profits.

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