• 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. What are the important elements of International Trade

    Adam Smith was the man who came up with what we commonly refer to as capitalism. It was his systematic treatment of how the exchange of goods, or a market, would create incentives to act in the general interest that later became known as political economy and even later economics.

  2. What were the main characteristics of Early Modern Europe?

    Hysteria towards witches often occurred at times of great social and economic distress, which may indicate that they were useful scapegoats for society. Between 1561 and 1670, 3229 women were executed (by burning or hanging) in South-Eastern Germany. Meanwhile, in England, 1000 were executed between 1559 and 1736.

  1. "The Rise & Fall of the Japanese Semiconductor Industry, 1970 - 2000"

    Answer (Part - I) In early 80s after experiencing a heavy defeat, US had understood that they are being out of the global marketplace in opposition to the competition of Japanese firms. US firms claimed that they were facing unfair competition from Japan.

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

    mobile industry and as a result, many retail shops have opened on high streets (or in the form of internet buying), has led to a continuous increase in consumer spending of UK citizens. This has resulted in creating more jobs within the mobile industry and thus improving UK employment figures.

  1. 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.

  2. Free essay

    Do high house prices in Trafford deter key public sector workers from seeking a ...

    There are major roads and highways in Trafford such as the M56, M60 and the A56. Trafford also has the Metrolink and is close to Manchester Airport. The Metrolink is being improved and it will connect to more places, which may cause demand to increase.

  1. Macroeconomic Objectives and their impact on Business Activity

    Higher wages over and above any gains in labour productivity causes an increase in unit labour costs. Also, the actual time and cost of negotiating this, and making the necessary administrative changes can be quite high and whilst managers are negotiating, they aren't doing anything else.

  2. Exchange Rates and their Effect on Morocco Report.

    By which the US dollar was linked to gold at $1 to 35oz of gold bullion and in turn other countries agreed to fix their exchange rate to the US Dollar. (Times, 2008) In 1971, President Richard Nixon ended dollar convertibility to gold fearing a run on fort Knox which did not hold sufficient gold.

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