2.4

Supply

9 flashcards to master Supply

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Definition Flip

Define 'supply' in economics.

Answer Flip

Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at a given price in a given period. It reflects the sellers' intentions, not necessarily the quantity actually sold.

Key Concept Flip

Explain the 'law of supply'.

Answer Flip

The law of supply states that, all other things being equal (ceteris paribus), as the price of a good or service increases, the quantity supplied will also increase, and vice versa. This is because higher prices incentivize producers to supply more.

Key Concept Flip

What is the difference between a 'movement along' and a 'shift' of the supply curve?

Answer Flip

A 'movement along' the supply curve is caused by a change in the price of the good itself, leading to a change in quantity supplied. A 'shift' of the supply curve is caused by a change in any determinant of supply other than price, affecting the entire supply schedule.

Definition Flip

List four determinants of supply (other than price).

Answer Flip

Determinants of supply include: costs of production (

Example: wages, raw materials), technology, government policies (taxes and subsidies), and the number of sellers in the market. Expectations about future prices also affect current supply.
Key Concept Flip

How does an increase in the cost of production affect the supply curve?

Answer Flip

An increase in the cost of production (

Example: higher wages) will decrease supply. This shifts the supply curve to the left, indicating that producers are willing and able to supply less at each price level.
Key Concept Flip

Explain how improved technology can affect supply.

Answer Flip

Improved technology typically reduces the cost of production, allowing firms to produce more output with the same inputs. This increases supply, shifting the supply curve to the right.

Key Concept Flip

What is a subsidy, and how does it affect supply?

Answer Flip

A subsidy is a government payment to producers, reducing their costs of production. Subsidies increase supply, shifting the supply curve to the right because producers are willing to supply more at each price level.

Key Concept Flip

How does an increase in taxes on production affect the supply curve?

Answer Flip

An increase in taxes on production (

Example: VAT) increases the cost of production for firms. This decreases supply, shifting the supply curve to the left.
Key Concept Flip

Distinguish between 'supply' and 'quantity supplied'.

Answer Flip

'Supply' refers to the entire relationship between price and the quantity of a good or service that firms are willing and able to offer for sale. 'Quantity supplied' is the specific amount of a good or service firms will offer at a given price.

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2.3 Demand 2.5 Price determination

Key Questions: Supply

Define 'supply' in economics.

Supply refers to the quantity of a good or service that producers are willing and able to offer for sale at a given price in a given period. It reflects the sellers' intentions, not necessarily the quantity actually sold.

List four determinants of supply (other than price).

Determinants of supply include: costs of production (

Example: wages, raw materials), technology, government policies (taxes and subsidies), and the number of sellers in the market. Expectations about future prices also affect current supply.

About Supply (2.4)

These 9 flashcards cover everything you need to know about Supply for your Cambridge IGCSE Economics (0455) exam. Each card is designed based on the official syllabus requirements.

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