WHAT IS SUPPLY?

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1-What is “supply’? The amount of a product offered for sale at all possible prices in the market.

2-Explain the “Law of Supply” Suppliers will normally offer more [quantity] for sale at high prices and less [quantity] at lower prices. Suppliers have an incentive to produce more at higher prices in hope of huge profits

3-How is the Law of Supply different from the Law of Demand? Supply *From the producer’s P.O.V. *The higher the price, the greater the quantity supplied and vice versa. *The supply curve slopes upward from left to right

3-How is the Law of Supply different from the Law of Demand? Demand *From the consumer’s P.O.V. *The lower the price, the greater the quantity demanded and vice versa. *The demand curve slopes downward from left to right

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4-What is a supply schedule? A listing of the various quantities supplied at all possible prices

5-What is a supply curve? A graph showing the various quantities supplied at all possible prices in the market.

6-What is a “change in the quantity supplied”? What does this change respond to? The amount offered for sale in response to a change in price.

7-What is a “change in supply”? How is it different from a “change in the quantity supplied”? Change in supply: something happens that causes suppliers to offer products at different amounts for sale at all possible prices. Curve shifts left [decrease of product supplied] or right [increase of product supplied] Change in the quantity supplied: Just a movement up and down the supply curve. Just affected by price. Price changes quantity, but it does not affect supply

8-What happens when the supply curve shifts to the: *left: less is offered at all possible prices *right: more is offered at all possible prices

9-Name and explain the 7 factors that determine whether supplies increase or decrease. 1-Cost of Resources-an increase or decrease in the cost of land, labor or capital will shift the curve left or right 2-Productivity-increases whenever more output is produced using the same amount of input [cost of resources] Happy, motivated workers: increase in supply [rightward shift] Unhappy, unmotivated workers: decrease in supply [left]

9-Name and explain the 7 factors that determine whether supplies increase or decrease. 3-Technology- New technology- shifts the curve rightward: lowers cost of production, labor-saving. Technological breakdown- shifts curve left because of increased costs.

9-Name and explain the 7 factors that determine whether supplies increase or decrease. 4-Taxes and Subsidies: Taxes: higher taxes raise the cost of production and supply decreases. Lower taxes: supply increases. Subsidies: a government payment to an individual, business or other group. They lower the cost of production and increase supply. Farmers are subsidized by the government

9-Name and explain the 7 factors that determine whether supplies increase or decrease. 5-Expectations: About future prices going up, wait for the price increase and increase supply then. Rightward Shift Future prices going down: Slow down or stop producing. Leftward Shift 6-Government Regulations 7-Number of Sellers

9-Name and explain the 7 factors that determine whether supplies increase or decrease. 6-Government Regulations: More regulations: Cause an increase in the cost of production and a decrease in supply: leftward shift Fewer regulations: Cause a decrease in the cost of production and a increase in supply: leftward shift 7-Number of Sellers More sellers: increase in supply and rightward shift Fewer sellers: decrease in supply and leftward shift