Ch.4

• What is a competitive market?


  A market where individual firms cannot influence the price due to competition
• What does a supply curve represent?


  A graph showing the quantity supplied at any given price
• What is competitive supply?


  A situation where a firm can produce alternative products using the same factors of production
• What is joint supply?


  When a firm produces more than one product together
• What is producer surplus?

  The difference between the price received by firms and the price they would have supplied at
• What are the key concepts related to supply that you need to know?

  • Relationship between price and quantity supplied
  • Individual and market supply
  • Movements along the supply curve (extension/contraction)
  • Shifts of the supply curve (increase/decrease)
  • Joint and competitive supply
  • Producer surplus
  • Effects of changes in price on producer surplus
  • Evaluation of the impact of changes in price on producer surplus
• What is the definition of supply?


  Supply is the amount of a good being sold onto the market by producers
• How does the supply curve behave at higher prices?


  It slopes upward because it becomes more profitable for firms to increase supply
• If the price of coffee increases, what happens to the quantity supplied?


  The quantity supplied increases
• What factors influence supply?

  Production costs, technology, taxes and subsidies, prices of related goods, expected prices, number of firms