Supply

• What is supply?

  The amount supplied by producers at given prices over a certain period of time
• What happens to supply when price rises?

  It becomes more pofitable for producers to supply a product, and so they have an incentive to increase production
• What happens to supply when price falls?

  It becomes less profitable for producers to supply a product, and so firms will decrease production
• What is the shape of the supply curve?

  Upward sloping
• How do the costs of production cause a shift in the supply curve?

  An increase in costs of production will mean there is a decrease in quantity supplied
• How does the productivity of the workforce cause a shift in the supply curve?

  The output of workers per hour worked will continue to increase in periods of economic growth, leading to more supplied
• How do indirect taxes cause a shift in the supply curve?

  An indirect tax will increase the cost of supply, such as through percentage tax or specific tax
• How do subsidies cause a shift in the supply curve?

  Grants to prodcuers from the government effectively lead to a decrease in costs of production
• How does new technology cause a shift in the supply curve?

  New inventions and new technology result in an increase in productivity
• How do the discoveries of new reserves of raw materials cause a shift in the supply curve?

  If a country discovers highly demanded or expensive resources such as oil, supply will increase