micro Econ

• a rise in price will always lead to an increase in the quantity supplied of that good /service -called an extension of supply
• This is because the increase in price incentivises the firm to increase output 
• economists call this a positive relationship='the law of supply'

• a reduction in costs of production=lead to an increase in supply because producers profits had increased
• technology can increase the efficiency of the productive process, this will reduce the costs of production which shifts the supply to the right 

• increased productivity=output per input of a factor of supply increases -supply shift to the right 
• an indirect tax on supply raises the costs of production -shifts the supply to the left 

• Tax 
• Technology
• Productivity
• Price 

effect of tax on supply :

-taxes are deemed as a cost by businesses 

-higher cots =decrease supply 

-taxes = decrease supply 

the incentive to expand production:

-when a firm's profits increase, it is incentivised to produce more output, because the more it produces, the more it will earn

-when costs of production fall, a firm will be incentivised to supply a higher quantity at a given price.-shown by a rightward shift in the supply curve 

-subsidies lover firms average cost per unit -encourages them to expand production

causes of supply curve shifts :

-changes in the price of inputs -will affect the cost of production 

-new technology -allows firms to produce at a lower cost 

-changes in gov policy-taxes /subsidies