Unit 1: Supply

• Define supply


  The amount of goods producers are willing and able to supply at a given time frame
• Law of supply


  There's a direct relationship between price and quantity supplied
• Why is there a direct relationship in supply?

  Profit motive (Producers are driven by how much money they can make)
• Why does the supply curve slope upwards?

  Because of the positive relationship between price and quantity supplied
• What causes an extension on the supply curve?

  An increase in price and QS, resulting in an upward movement of the curve
• What causes the supply curve to contract?

  A decrease in price and QS, results in a downward movement along the curve
• What causes the supply curve to shift?

  Changes to conditions of supply, irrespective of price level
• Why does a supple curve shift to the left?

  Because there's a decrease in supply
• Why does the supply curve shift to the right?

  There's an increase in supply
• How does new technology impact supply?

  Increases productivity and lowers COP
• What is the acronym for the conditions of supply?

  PINTS WC
• What does the acronym stand for?

  P-Productivity, I-Indirect Taxes, N-Nr of firms, T-Technology, S-Subsidy, W-Weather, C-Costs of production