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Define supplyt and State the law of supply.2 List and explain the determinants of supply and how each can cause an increase in supply and a decrease in supply3Thoroughly and completely explain thedifferences between a change in supply and a change in quantity supplied, the causes of those changes, and how each is graphically represented.

Question
  1. Define supplyt and State the law of supply.

2 List and explain the determinants of supply and

how each can cause an increase in supply and a decrease in supply

3Thoroughly and completely explain the

differences between a change in supply and a change in quantity supplied, the causes of those changes, and how each is graphically represented.

check_circleAnswer
Step 1

1)

Supply is the amount of the product that the producers are willing to sell at a given time period at various levels of prices, and all other factors are held constant.

The law of supply- When the price increases and all other things are constant, quantity supplied increases and vice versa.

Step 2

2)Determinants of supply and how each can cause an increase in supply and a decrease in supply are given below:

i)

Price of the good that is to be sold: If the price of the good increases in the market, the supply of it will also increase as the producers can earn extra profits. Therefore, If Price ↑ Supply ↑ and vice versa.

Step 3

ii)

Price of related goods- There are two types of related goods complementary goods (that are used with the good like car and petrol) and substitute goods (that are used as an alternative to this good like tea and coffee).

If the price of the complementary good increases in the market, the supply of the good will also increase.  Therefore,...

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