1.2.2 The determinants of supply

• What does supply refer to in economics?

  Quantity producers offer at price
• Higher prices usually encourage more production
• Lower costs of raw materials increase supply.
• How does technological advancement affect supply?

  Reduces production costs
• More firms in the market increase the total supply
• Government subsidies lower production costs and increase supply.
• Match the determinant of supply with its effect:

  Natural Factors ↔️ Weather conditions affect agricultural supply

  Expectations ↔️ Future price expectations influence current supply
• What effect do higher prices have on supply?

  Increase supply
• Lower costs of production lead to higher supply.
• Improved technology leads to a reduction in production costs
• How do more firms in the market affect supply?

  Increase supply
• Government subsidies lower production costs and increase supply.
• What role do future price expectations play in supply decisions?

  Influence current supply
• The determinants of supply can either increase or decrease the supply
• The determinants of supply can affect the quantity of goods producers are willing to offer.
• What are the factors influencing supply known as?

  Determinants of supply
• Match the determinant of supply with its effect:

  Price ↔️ Higher prices increase supply

  Government Policies ↔️ Taxes decrease supply, subsidies increase supply
• Higher prices encourage producers to increase supply.
• How do lower production costs affect supply?

  Increase supply
• What are the determinants of supply influenced by?

  Factors affecting supply
• Higher prices lead to an increase in supply because producers are motivated to produce more.
• Lower costs of production reduce expenses, leading to an increase in supply
• How does improved technology affect supply?

  Increases supply
• Subsidies provided by the government increase supply by lowering production costs.
• Weather conditions and natural events are considered natural factors
• What happens to supply if producers expect higher future prices?

  Increases current supply
• Supply refers to the quantity of a good or service producers are willing and able to offer for sale at a particular price
• How do higher prices affect the supply of a good or service?

  Increase supply
• Lower costs of production enable firms to increase supply because expenses are reduced.
• What impact does improved technology have on supply?

  Increases supply
• More firms in the market lead to a higher overall supply
• How do natural factors, such as weather, affect agricultural supply?

  Weather conditions affect supply
• Future price expectations can influence current supply decisions by producers.
• Supply refers to the quantity of a good or service producers are willing and able to offer for sale at a particular price
• The determinants of supply can either increase or decrease the quantity
• The law of supply states that as the price of a good or service increases, the quantity supplied will decrease.

  False
• What is an exception to the law of supply for labor?

  Backward bending supply curve
• A supply curve graphically represents the relationship between price and quantity
• A rightward shift in the supply curve indicates a decrease in supply.

  False
• What are the determinants of supply?

  Factors influencing supply