Supply

• What does a supply curve represent?


  A supply curve shows the relationship between price and quantity supplied.
• What causes movement along the supply curve?


  Movement along the supply curve is caused by changes in price.
• How do supply curves typically slope?


  Supply curves usually slope upwards.
• What does a higher price for a good indicate for producers?

  A higher price indicates a higher quantity supplied as producers aim to maximize profits.
• Why do producers increase supply when prices rise?


  Higher prices provide an incentive to expand production and increase supply.
• What must happen for firms to produce more goods?


  The price must increase by more than the costs of production.
• What effect do increased prices have on marginal firms?


  Increased prices make it profitable for marginal firms to supply the market.
• What happens to the supply curve when there is a decrease in the amount supplied at every price?


  The supply curve moves to the left.
• What happens to the supply curve when there is an increase in the amount supplied at every price?


  The supply curve shifts to the right.
• What are the factors that can cause a shift in the supply curve?


  • Changes in the costs of production
  • Improvements in technology
  • Changes to the productivity of factors of production
  • Direct taxes and subsidies
• What effect does an increase in production costs have on the supply curve?


  An increase in production costs shifts the supply curve to the left.
• How does a decrease in production costs affect the supply curve?


  A decrease in production costs shifts the supply curve to the right.
• How can technological improvements affect supply?


  Technological improvements can increase supply by reducing production costs.
• What is the impact of more productive staff on the supply curve?


  More productive staff lead to an increase in output, shifting the supply curve to the right.
• What effect does a direct tax on a good have on the supply curve?


  A direct tax on a good increases costs for a producer, reducing supply and shifting the supply curve to the left.
• What does the Law of Supply state?

  There is a direct relationship between price and quantity supplied
• What happens to the quantity of milk produced when the price increases?

  The quantity of milk produced increases
• Why do dairy farmers produce more milk when prices increase?

  Because they want to make more profit
• How is the supply curve characterized?

  The supply curve is upward sloping
• What does a change in price do to the supply curve?

  It moves along the supply curve
• What direction does an increase in supply shift the supply curve?

  To the right
• What direction does a decrease in supply shift the supply curve?

  To the left
• What are the five shifters of supply?

  1. Change in the price of inputs or resources
  2. Number of producers
  3. Change in technology affecting productivity
  4. Government involvement (taxes or subsidies)
  5. Future expectations of profit
• What happens to supply if the price of dairy cows increases?

  The supply of milk decreases
• How does an increase in the number of dairy farmers affect the supply of milk?

  It increases the supply of milk
• What effect does new technology have on the supply of milk?

  It increases the supply of milk
• What is a subsidy in the context of government involvement in supply?

  A subsidy is when the government gives money to farms to produce more output
• What happens to supply when a tax is imposed on producers?

  The supply curve shifts to the left
• How do future expectations of profit affect current supply?

  If producers expect higher profits later, they will hold back supply now
• What happens to supply when the price of a product increases?

  Nothing; it only affects quantity supplied
• What is market equilibrium?

  It is where quantity demanded equals quantity supplied
• What is a surplus in the context of supply and demand?

  A surplus occurs when quantity supplied is greater than quantity demanded
• How much is the surplus when the price is five dollars?

  Forty gallons of milk
• What happens to the price of milk when there is a surplus?

  Producers will lower the price to reach equilibrium
• What is a shortage in the context of supply and demand?

  A shortage occurs when quantity demanded is greater than quantity supplied
• How much is the shortage when the price falls to one dollar?

  Seventy gallons of milk
• What will happen to the shortage unless something unusual occurs in the market?

  The shortage will eventually fix itself
• What will the next video discuss?

  The shifting of the entire demand or supply curve
• How do changes in price affect the demand and supply curves?

  • A change in price moves along the demand curve
  • A change in price moves along the supply curve
  • A change in other factors shifts the demand or supply curve
• What is the definition of supply in economics?

  Supply is the quantity of goods that sellers are prepared to sell at any given price over a period of time.