Tutor HuntResources Economics Resources
Law Of Supply
Date : 18/10/2013
Author Information
Uploaded by : Gull
Uploaded on : 18/10/2013
Subject : Economics
higher prices gives the supplier more incentive to supply the good in a market as it is more profitable economics4
Factors that Affects Supply:
cost of production - if PRICE is FIXED and PRODUCTION COST RISES then SUPPLY will FALL as sellers make LESS PROFIT indirect taxes (taxes imposed by the government) - if TAX RISES = SUPPLY will FALL VAT (advalorem tax) - percentage added to the price of good. results in the supply to make a non-parallel shift to the left
Excise duties (specific/unit tax) - a sum is added to the price of good. results in the supply to make a parallel shift to the left
subsidies - government provides money to firm to try to encourage them to produce more of a particular group; if government grants subsidies than SUPPLY will RISE (increases incentive and lowers production costs) changes in technology - improved new technology helps lower production cost thus SUPPLY RISES (more efficient) natural factors - some goods may be influenced by natural factors price of other goods - if PRICE of a GOOD increases, the seller would supply more of than goods but leaving an opportunity cost on another product
This resource was uploaded by: Gull
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