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IGCSE Economics Notes Supply

IGCSE Economics Notes Supply

2.4.1- Supply

 

Click the highlighted blanks to reveal key definitions and ideas. Headings have been retained and the blanks are designed to match IGCSE level.

1 Supply

Supply is the willingness and ability to
________________ sell
a product.
Market supply is the
________________ total supply
of a product.

2 Extension in supply

Extension in supply is a
________________ rise
in quantity supplied.
It is caused by a rise in the
________________ price
of the product itself.
A rise in price will cause an
________________ extension
in supply.

3 Contraction in supply

Contraction in supply is the
________________ fall
in quantity supplied.
It is caused by a fall in the
________________ price
of the product itself.
A fall in price will cause a
________________ contraction
in supply.

4 Supply schedule

A supply schedule records different
________________ quantities supplied
at different prices.
It shows the relationship between
________________ price and quantity supplied
.

5 Supply curve

A supply curve is a
________________ curve
plotted from a supply schedule.
Supply curves slope
________________ up
from left to right.
This shows that when price rises, quantity supplied usually
________________ increases
.

6 Effect of change in price on supply

A rise in price causes an
________________ extension
in supply.
A fall in price causes a
________________ contraction
in supply.
These are movements
________________ along
the supply curve.

7 Shifts in the supply curve

A shift to the right indicates an
________________ increase
in supply.
For each and every price,
________________ more
is supplied.
A shift to the left indicates a
________________ decrease
in supply.
For each and every price,
________________ less
is supplied.

8 Causes of changes in supply

Changes in the cost of
________________ production
can change supply.
Improvements in
________________ technology
raise productivity and lower production costs.
Higher
________________ taxes
make it more expensive to supply a product.
________________ subsidies
help producers supply more.
Weather conditions and the health of livestock and crops can affect
________________ agricultural products
.
The prices of
________________ other products
can also influence supply.
Disasters and
________________ wars
can cause a significant decrease in supply.
Discoveries and depletion of
________________ commodities
can increase or reduce supply.

9 Prices of other products

Firms may divert existing
________________ resources
to produce a more popular product.
This increases the supply of the
________________ popular product
and reduces the supply of the less popular one.
Some products are jointly
________________ supplied
.
If more sheep are produced, more wool and
________________ milk
will be available.
A rise in the price of one jointly supplied product may cause an extension in supply of the
________________ other product
.

10 Reasons why the supply curve of a product may shift to the right

A government
________________ subsidy
can reduce production costs.
A fall in costs of
________________ production
means firms can produce more at the same price.
Advances in
________________ technology
lower costs.
Good
________________ weather
can increase the supply of agricultural products.
Seasonal
________________ factors
can increase supply when a crop is in season.
Reduction in indirect
________________ tax
lowers costs of production.
Changes in the price of other products can cause firms to move
________________ resources
between products.

You need to know:

(a) Supply is the willingness and ability to sell a product.

(b) Extension and contraction in supply are caused by changes in the product’s own price.

(c) A supply schedule and supply curve show the relationship between price and quantity supplied.

(d) A shift right means an increase in supply, while a shift left means a decrease in supply.

(e) Supply can be affected by production costs, technology, taxes, subsidies, weather, prices of other products, disasters and discoveries.

(f) Government subsidy, lower costs, advances in technology and good weather can all shift supply to the right.

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