Question

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Which is the best title for this diagram?

The Definition of Supply
Factors That Affect Supply
Elasticity and Competition
The Law of Supply

Answer 1

The second alternative is correct.

The best title for the chart is "Factors That Affect Supply".

The supply of goods and services responds to the stimulus of the economy and the law of supply and demand, according to which supply and demand for goods and services determine market prices.

Variations in supply are explained through the concept of elasticity. The supply of a good is considered elastic when small variations in the market price are sufficient to significantly change the quantity offered. Conversely, when price changes do not significantly affect supply, we say supply is inelastic.

Another factor influencing supply is the firm's productive capacity. In the short term, the firms have a facility that limits the expansion of supply beyond installed capacity. Thus, if a firm wants to increase supply, it will need to increase its productive capacity first.

Finally, competition is a natural factor that affects supply, since it changes the price of goods and services. Firms will only provide if their cost structure makes it possible to make a profit at each price level practiced in the market.

Answer 2

Answer:

Factors That Affect Supply

Explanation:

In economics, supply is defined as the quantity of goods or services that producers are willing to sell to consumers under certain market conditions. When the conditions are characterized by the joint price of all the pairs of market price and offer, they form the so-called supply curve. We must therefore differentiate the supply curve, a current offer or quantity offered (which in general would be a specific point of that offer), which refers to the amount that producers are willing to sell at a certain price.

In the market economy system, it is accepted that the price and quantity supplied are determined by a balance between supply and demand (in non-competitive markets or those that present market failures, other additional factors may intervene).

The supply curve is the one that shows the link between the price of one or two goods and the quantity offered. The slope of this curve determines how the supply increases or decreases in the face of a decrease or an increase in the price of the good. It is called the elasticity of the supply curve to the percentage variation experienced by the quantity offered of a good when its price varies by 1%, keeping constant the other factors that may affect the quantity offered. The law of supply establishes that: In the event of an increase in the price of a good or service, the quantity offered of that good or service will be greater; that is, those that produce them will have a greater incentive.