Supply
Quantity firms are willing to produce at a given price.
Supply
Key definitions
Supply curve
Shows relationship between price and quantity supplied.
Extension of supply
Movement forwards along S when price rises.
Contraction of supply
Movement backwards along S when price falls.
Profit maximisation
Firms assumed to respond to higher prices by supplying more.
Shift of supply
Caused by non-price factors.
PINTSWC
Productivity, Indirect taxes, Number of firms, Technology, Subsidies, Weather, Costs.
Productivity
Higher output per worker lowers unit costs — shifts supply right.
Technology
Improvements shift supply right.
Indirect tax
Shifts supply left.
Subsidy
Shifts supply right.
Spare capacity
Allows firms to increase output quickly.
Number of firms
More firms increase market supply.
Weather
Good/bad conditions affect agricultural and seasonal supply.
Costs
Higher input costs shift supply left.
Key concepts
Higher price creates extension of supply along the curve.
Only non-price factors shift the entire supply curve.
Use PINTSWC to remember supply shifters in exams.
Relevant tips
- Use PINTSWC to structure supply-shift essays.