Question

Question No 5:

1. Using the supply schedule given below, draw an accurately labelled supply curve. Also, comment on the shape of the supply curve. Why does the supply curve slope like this? Explain clearly.

Price	10	8	6	4	2
Supply	500	400	300	200	100

[Answer in 180 – 240 words]

[Draw in paper; take photo and paste/Use MS Word/add screenshot]

2. Do you think the level of technology available have an impact on the supply of a product? Using examples, discuss the impact of technology on supply.             [Answer in 60 – 80 words]
3. What do you think the impact of a change in tax on the supply of a product? Using examples, discuss the impact of tax on supply.                                                        [Answer in 60 – 80 words]

Answer 1

Question 5.

Price	10	8	6	4	2
Supply	500	400	300	200	100

Here we can observe that supply curve is straight line upward sloping it is so because of positive relationship between price and quantity supplied that is if price of a good increases and cost of producing it remain same then producer can earn more by supplying more so producer will increase its quantity supplied.

Yes, the level of technology available have a positive impact on the supply of the product. For example, there is a firm A who is making smart phones. With the given technology it can produce 1 units in a minute but as the technology upgraded it enhance the productivity and firm can produce 2 units in a minute. So there is an increase in quantity supplied by the firm. This will cause rightward shift of supply curve.

Yes, there is a significant impact of tax on supply. For instance suppose there is a rise in tax rate on producer it means that producer will receive less than the market price because tax will deduct from market price. So due to fall in producer receipt they will earn less profit as compare to the initial situation so firm will supply less to the market. It cause leftward shift of supply curve.