The price of rice rises. What happens to the supply of rice?

there is an extension in supply, along the curve. A change in the product's own price moves along the curve. A higher price gives an extension.

Which would shift the supply curve for bread to the left?

a rise in bakers' wages. Higher wages raise costs, so less is supplied at each price.

Why does a supply curve slope upwards?

A higher price makes it more worthwhile for firms to supply more. A higher price gives more revenue for each unit, and so more reason to sell.

A government gives farmers a subsidy for each tonne of maize. What happens to the supply of maize?

It increases. A subsidy lowers farmers' costs, so they supply more at each price.

A drought destroys much of the cotton crop. This causes

a decrease in the supply of cotton. A natural factor has cut the amount available at every price: a shift to the left.

Supply · Edexcel IGCSE Economics 4EC1 revision

In plain words

Supply is how much of a product firms are willing and able to sell at each price. A higher price makes selling more worthwhile, so firms offer more: a supply curve slopes up from left to right.

As with demand, the product's own price moves you along the curve, and anything else shifts it.

4 things to know

Market supply is the total of all the individual firms' supply at each price.
A change in the product's own price causes a movement along the curve: an extension (more supplied at a higher price) or a contraction (less at a lower price).
Things that shift supply: costs of production (wages, raw materials), technology, indirect taxes, subsidies, and natural factors such as the weather.
Lower costs, better technology or a subsidy shift supply to the right (an increase). Higher costs or a tax shift it to the left (a decrease).

Worked example

Workers in shoe factories win a large pay rise. What happens to the supply of shoes?

Wages are a cost of production, so making each pair of shoes now costs more.
Firms are willing to supply fewer shoes at every price.
The supply curve shifts to the left: a decrease in supply.

Tips and tricks

Anything that changes firms' costs shifts supply. Anything that changes what buyers want shifts demand. Decide which side of the market is affected before you draw.
Left is less for both curves. A decrease in supply shifts left, even though on the diagram the curve also moves upwards.

5 questions, about 2 minutes.

It lands in your notebook with its questions as flashcards.

Supply: 5 questions and answers

These are the quiz’s questions. Do the quiz first, then come back here for the ones that got you.

The price of rice rises. What happens to the supply of rice?
- supply increases, and the curve shifts right
- there is an extension in supply, along the curve (the answer)
- supply decreases, and the curve shifts left
- there is a contraction in supply, along the curve
A change in the product's own price moves along the curve. A higher price gives an extension.
Which would shift the supply curve for bread to the left?
- a fall in the price of flour
- a subsidy to bakeries
- a rise in bakers' wages (the answer)
- a new, faster oven
Higher wages raise costs, so less is supplied at each price.
Why does a supply curve slope upwards?
- Consumers buy more at higher prices.
- A higher price makes it more worthwhile for firms to supply more. (the answer)
- Costs fall as price rises.
- Firms always want to sell less.
A higher price gives more revenue for each unit, and so more reason to sell.
A government gives farmers a subsidy for each tonne of maize. What happens to the supply of maize?
- It increases. (the answer)
- It decreases.
- It contracts.
- It does not change.
A subsidy lowers farmers' costs, so they supply more at each price.
A drought destroys much of the cotton crop. This causes
- an extension in the supply of cotton
- an increase in the supply of cotton
- a decrease in the supply of cotton (the answer)
- a decrease in the demand for cotton
A natural factor has cut the amount available at every price: a shift to the left.

5 questions

Tap an answer and you’ll see straight away whether it’s right, and why.

Worksheet

3 questions, 7 marks. Write your answers on paper, then check them.

Supply

Edexcel International GCSE Economics 4EC1 · 7 marks · papermunch.org

Name ______________________________ Date ______________

Define supply.[2]
Show answerHide answer
The quantity of a product that producers are willing and able to sell at a given price in a given time.
I got this one
State two causes of an increase in the supply of wheat.[2]
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Any two of: good weather, cheaper fertiliser, better farming technology, a subsidy to farmers.
I got this one
A government puts a tax on each bottle of fizzy drink that firms sell. Explain the effect on supply.[3]
Show answerHide answer
The tax adds to firms' costs for every bottle. They are willing to supply fewer bottles at each price, so supply decreases and the curve shifts left.
I got this one

Answers: Supply

1. The quantity of a product that producers are willing and able to sell at a given price in a given time.
2. Any two of: good weather, cheaper fertiliser, better farming technology, a subsidy to farmers.
3. The tax adds to firms' costs for every bottle. They are willing to supply fewer bottles at each price, so supply decreases and the curve shifts left.