Unit 1

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  • Created by: lucy
  • Created on: 21-04-14 08:14

supply

Workforce production - if your workers become better skilled perhaps because of better training - then the costs in the long run will tend to fall supply more profits rise and curve shifts right.

Price of substitutes - if price for a reasonable substitue rises then the firm might decide to switch its production to this type of product. e.g. farming ( cabbages, brocoli)

Price of complements - if goods and services rise for one of them then the firm might choose to produce the complementary product - supply shifts right,

Indirect taxes - if the governent imposes tax on a product e.g. VAT - raises cost. supply curve shifts left because firms might back out of their supply.

Indirect taxes

Two main types - Ad valorem tax (% added on - VAT)

Specific tax - a fixed amount of tax on each unit e.g. import duties

If the government imposes a sales tax on products e.g. VAT then the costs of firms will rise - supply shifts left.

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