Chapter 7

Cards (10)

  • Law of Supply: as supply increases, so does the price (and vice versa) since supply and price have a direct relationship. This is because there will be more price to fund the supply or more price from demand to fund supply to counteract the demand.
  • Factors that affect supply are very similar to factors that affect demand
  • What curve is this?
    The supply curve
  • Supply: The willingness and ability of producers to provide a quantity of good/service at various price levels at a given time.
  • Expansions and contractions in the supply curve is caused due to higher price, since:
    1. Higher prices can mean lower demand
    2. Higher prices can fund a higher amount of supply being produced.
  • Factors that increase/decrease supply:
    1. Changes in complementary and supplementary goods
    2. Changes in technology for capitol equipment
    3. Fall/rise in the cost factors for production
    4. Increase/decrease in the availability/quantity of resources
    5. Favourability of climate conditions/weather patterns to the supply-making procedure
  • Perfectly elastic supply

    *same for demand
  • Perfectly inelastic supply

    *Same for demand
  • Outlay refers to the total amount of revenue gained from sold goods and services
  • Factors affecting supply:
    • time lags after a price change
    • Ability to hold and store stock
    • Excess capacity