Some of the factors outlined below influence the supply of an individual firm - Leaving Cert Economics - Question 2 - 2013
Question 2
Some of the factors outlined below influence the supply of an individual firm.
Write True or False after each of the following sentences.
(i) The price of the good ... show full transcript
Worked Solution & Example Answer:Some of the factors outlined below influence the supply of an individual firm - Leaving Cert Economics - Question 2 - 2013
Step 1
(i) The price of the good itself.
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Answer
True. The price of the good itself directly affects the supply, as higher prices typically incentivize firms to produce more of the good.
Step 2
(ii) The cost of labour.
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Answer
True. The cost of labour influences the supply by affecting production costs; if the cost of labour increases, the firm may reduce supply.
Step 3
(iii) The consumer’s taste / preference for the good.
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Answer
False. While consumer preferences affect demand, they do not directly influence the supply of an individual firm.
Step 4
(iv) The state of the firm’s production technology.
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Answer
True. The state of production technology impacts the efficiency and capacity of production, thus influencing the supply.
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