Cambridge International as and a level Economics Ebook

SELF-ASSESSMENT TASK 
2.4
1
Using 
Figure 2.2
, how many PCs per week are 
companies planning to supply if the price is 
$1,100? What price would persuade companies to 
supply 1,350 PCs?
2
What assumptions are you making when you 
answer these questions?
3
What might be the advantages and disadvantages 
of using a diagram like 
Figure 2.2
 to represent 
supply?
Factors influencing supply
Th
e price of a good or service is not the only factor 
infl uencing its supply in the market. In practice there are 
many considerations. Th
e main factors include:
■ 
Costs: Supply decisions taken by companies are invariably 
driven by the costs of producing and distributing their 
products to customers. For many types of business, labour 
costs are an important item. In others, the cost of energy 
or transport may be more important, or the productivity of 
workers can have a huge impact on costs. This is particularly 
the case in motor vehicle production and assembly.
■ 
Size and nature of the industry: If an industry is growing 
in size, then more will be supplied to the market. 
Supply schedule: 
the data from which a supply curve is drawn.
KEY TERM
Price of a ‘standard’ 
PC (US$)
Quantity supplied per 
week – supply curve 
S
0
800
1,000
1,000
2,000
1,200
3,000
1,400
4,000
1,600
5,000
1,800
6,000
2,000
7,000
Table 2.2
 
Market supply schedule for PCs
1200
800
1000
3000
Quantity supplied
S
0
0
Price (US$)
Figure 2.2 
The market supply curve for PCs