The Determinants of the supply of goods and services

SUPPLY= the amount offered for sale at each given price level
PLANNED SUPPLY= the amount producers plan to produce at each given price
ACTUAL SUPPLY= the amount that producers in fact produce. This may differ from planned supply for a variety of reasons such as breakdowns in production, staff absences etc.
Shifts in Supply
1. Causes
  1. Rightward Shift
  2. Leftward Shift
  3. wage costs
    1. decrease
    2. increase
    3. expenditure tax (indirect) by government
      1. removed
      2. imposed
      3. production subsidies (e.g. on farming) by government
        removed
        imposed
        technical progress (reducing costs)
        occurs
        doesn't occur
        firms...
        enter a market
        leave a market
        other costs
        decrease
        increase
Movements along the supply curve
2. Extension in supply
  1. when the amount offered for sale is increased because the price level has risen
3. Contraction in supply
  1. when the amount offered for sale is reduced because the price level has fallen
The Supply Curve shows the relationship between amount offered for sale and the price
1. We assume that firms want to maximise profits so when the price is high they will want to supply more
  1. So price and supply are proportional (as price increases, quantity supplied increases)
MARKET SUPPLY= the sum of all individual firms' supply curves at each given price

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	Created by beth2384 over 10 years ago