Supply and production conditions
| English | 中文 | Pinyin |
|---|---|---|
| supply/səˈplaɪ/ | 供给 | gōng jǐ |
| indirect tax/ɪndaɪˈrekt tæks/ | 间接税 | jiàn jiē shuì |
A decision you can investigate
- Two nurseries charge the same price for plants. One installs efficient watering equipment; the other loses plants during a storm.
- Their willingness and ability to supply 供给 can move in opposite directions.
Build the explanation
- Supply is the quantity sellers are willing and able to offer at each price over a period. A change in the product’s own price gives movement along supply.
- Lower input costs or better technology can increase supply. An indirect tax 间接税 can reduce it; a per-unit subsidy can increase it. Weather and disasters affect productive conditions, especially for primary products.
Work through the evidence
- At 20 yuan per plant, a nursery originally offers 80 plants. Efficient watering reduces costs and it now offers 100 at that price: supply increases.
- A storm that destroys seedlings may reduce the quantity offered at every price. A tax raising cost per plant has a different cause but can also shift supply left.
Which change tends to reduce supply at each price?
The tax changes production conditions; an own-price fall causes movement along supply.
Why can better watering technology increase supply?
Improved productive conditions allow more to be offered at each price.
A higher own price and better technology are the same kind of supply change.
Own price causes movement along a curve; technology can shift that curve.
Test the limits
- An increase in actual sales does not by itself prove supply shifted: demand may have risen and moved the seller along supply. A warehouse stock is available inventory, not a complete supply schedule.
- A subsidy’s effectiveness depends on productive constraints and the period. A payment cannot instantly replace destroyed plants.
What does a supply schedule show?
Supply is a price–quantity relationship, not one stock or sales observation.
Apply and explain your answer
- Which nursery change is a supply shift rather than a movement along supply?
- Lower watering costs increasing plants offered at the same price.
Match the terms to their meanings.
Each term describes a specific mechanism in this lesson.
Use the terms precisely
- supply: Quantities sellers are willing and able to offer at different prices over a period.
- indirect tax: A tax on spending or a transaction, rather than directly on income.
At 20 yuan per plant, a nursery originally offers 80 plants. Efficient watering reduces costs and it now offers 100 at that price: supply increases. A storm that destroys seedlings may reduce the quantity offered at every price. A tax raising cost per plant has a different cause but can also shift supply left.
An increase in actual sales does not by itself prove supply shifted: demand may have risen and moved the seller along supply. A warehouse stock is available inventory, not a complete supply schedule. A subsidy’s effectiveness depends on productive constraints and the period. A payment cannot instantly replace destroyed plants.
Supply is the quantity sellers are willing and able to offer at each price over a period. A change in the product’s own price gives movement along supply.