Page 102 - Microsoft Word - 00 ACCA F1 Notes Prelims.docx

Chapter 7

Supply

4.1 Supply

Supply is the amount that producers are willing and able to produce at a given price.

4.2 Factors affecting supply for a good

 Price As P, supply  due to cost considerations

 Prices of other goods Better to make them instead?

 Cost changes e.g. new technology, greater efficiency, VAT

 Success of harvests Especially agricultural goods

4.3 Changes in the factors affecting supply

Changes in price Changes in the conditions of supply

Leads to movements along the curve Leads to movements of the curve

P P
P – Expansion S 2
S
S 1

P – Contraction Shift in supply

Q Q

96