• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Concept of Supply

Extracts from this document...


Describe factors affecting Supply and with the aid of diagrams, give scenarios of each case. There are many factors affecting supply and they must all be isolated and analyzed individually and under the ceteris paribus assumption; that is; all other factors remain constant. The determinants of supply can lead to contractions or expansions if supply depends on the price of the good itself, or increases and decreases if any other factor than supply. The market price of the good/service will influence the producer's ability and willingness to supply it. If the price of that good is too low, producers would not be able to cover costs of production and thus would not supply item. Generally, according to the law of supply, as price rises, quantity supplied rises and as price falls, quantity supplied falls. ...read more.


Future expectations will also influence the level of supply; if the supplier believes the price will rise in the future, due to an increase in demand, supply of the good and service will also increase due to possibility of increased profits arising from supply of the good. The opposite effect will also occur if future prices fall. An example of this is DVD manufacturers. If they believe that future expectations are grim, due to a possible increase in sales of Blu-ray Discs, and a subsequent decrease in DVD sales they will generally reduce supply of the DVDs to reduce possible losses incurred. The quantity of a good or service supplied at any time will be affected by technology levels. ...read more.


The actual quantity of the good available is a limiting factor that affects supply. For example the quantity of iron that can be supplied is determined by the known reserves of iron ore. The number of suppliers also affects the quantity of good or service available; that is; as more suppliers enter an industry, supply increase and vice versa if suppliers leave. Seasonal influence generally plays a small role however this determinant generally only affects agricultural supply of perishable products such as wheat and fruit. An extended drought period would decrease supply of most agricultural products where else an extended bountiful time period would increase harvest hence supply. In conclusion, there are many factors affecting supply, and some of the main ones have been briefly described. These factors can either be detrimental or beneficial in relation to determining the allocation and distribution of supply. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Here's what a star student thought of this essay

4 star(s)

Response to the question

This essay engages with the question well, offering a strong insight into the factors determining supply. There are clear explanations, and a wide number of examples used. I know the question didn't directly ask for a discussion of elasticity, but ...

Read full review

Response to the question

This essay engages with the question well, offering a strong insight into the factors determining supply. There are clear explanations, and a wide number of examples used. I know the question didn't directly ask for a discussion of elasticity, but it would've been nice to see some awareness that there are factors which affect this too.

Level of analysis

The analysis is strong in this essay. I particularly like how the essay shows understanding of ceteris paribus, and the need to take each factor in isolation due to the dynamic nature of the factors affecting supply. I would be careful when referring to contractions and increases of supply - in my opinion this terminology is ambiguous. Saying that a change in price will cause a movement along the curve, and any other factor causes a shift in the curve, will ensure clarity. I would've liked to have seen some awareness that an increase in raw materials will increase the costs of production, and so the supply curve will shift left. I know this essay includes a diagram, but it is key that you explain it. Clearly explaining the mechanisms and effects is the secret to getting top marks for analysis in Economics. A short sentence such as: "The increase in raw materials has caused S to shift left to S1, thus increasing the equilibrium price from P to P1 and decreasing the equilibrium price from Q to Q1".

Quality of writing

This essay is well structured and has a clear introduction and conclusion. I would've liked to have seen a bit more evaluative language such as "it depends upon" or "the size of the shift is greatly affected by the size of". Other than that, this essay is strong!

Did you find this review helpful? Join our team of reviewers and help other students learn

Reviewed by groat 21/02/2012

Read less
Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Marked by a teacher

    Would It Be Economically Beneficial to Britain to Introduce An Obesity Tax?

    5 star(s)

    Footballers for example are paid to do physical work - they are ultimately 'paid to exercise'. Lawyers and economists, by contrast, are mostly paid to sit behind desks - for them, expending calories may mean paying lots of money for a gym membership, as well as spending time away from

  2. An Analysis of the Micro-Environment and Macro-Environment factors for the Mobile Phones Industry in ...

    Hence, all the firms within the industry have to be aware of their competitors and their policies, so that they can react quickly to changing market strategies of other firms in the industry. However, all firms would try to build customer loyalty by providing better customer service.

  1. Economics - Classical School of Thought, Keynesian School of Thought, Supply Side School of ...

    Everyday billions of shares from thousands of public corporations change hands at the most optimum prices level without the intervention of any governmental body. No one fixes the number of shares that are bought and sold, no one externally sets the pricing and no one controls who is going to buy or sell when.

  2. Development Theories - Describe the Harrod-Domar model of growth

    Lewis suggested that the modern industrial sector would attract workers from the rural areas. Industrial firms, whether private or publicly owned could offer wages that would guarantee a higher quality of life than remaining in the rural areas could provide.

  1. GCSE Economics Coursework

    compared to the months with no interest rate increases, or an interest rate decrease. While this is good for the shop, as it increases the profits, it causes negative externalities or social costs, such as healthcare costs for treatment for smoking related diseases, and anti smoking advertising, lost labour hours

  2. Airline Industry and Contestability Project - What is a contestable market?

    Examples of these are that availability of take-off and landing slots in airports restricts the amount of airlines that can exist in an industry. This is because a runway can only have a certain amount of capacity and a certain amount of airliners using it.

  1. Macroeconomic Objectives and their impact on Business Activity

    They are not actively searching for a job, but instead they are waiting to begin their next job. In general, frictional unemployment is partial and temporary. Seasonal Unemployment This type of unemployment occurs when industries have a slow season, such as construction and other outdoor work in winter.

  2. Labour is one of the four factors of production along with land, capital and ...

    Industrial tribunal: A body that has been established to deal with industrial disputes through conciliation or arbitration. Collective bargaining: Negations between firms of the same area to determine wage levels and conditions of employment. Conciliation: A process, which involves a third party assisting disputing parties to reach an agreement.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work