Supply: Factors affecting Supply (Costs of Production, etc.)

AQA

GCSE

Analysis of the non-price determinants of supply, focusing on the profit-maximizing behavior of firms. Candidates must distinguish rigorously between movements along the supply curve (caused by price changes) and shifts of the supply curve (caused by changes in costs of production, technology, government intervention, and external shocks). Mastery of the transmission mechanism from cost changes to profit margins and subsequent supply adjustments is essential.

Objectives

Exam Tips

Pitfalls

Key Terms

Mark Points

What You Need to Demonstrate

Key skills and knowledge for this topic

Award marks for clearly distinguishing between 'change in quantity supplied' (price) and 'change in supply' (non-price factors)
Credit responses that explicitly link changes in production costs to changes in profit margins and the subsequent incentive to supply
Diagrams must be fully labelled (Price, Quantity, S1, S2) with arrows indicating the correct direction of the shift
Analysis must demonstrate the chain of reasoning: Event -> Cost Impact -> Profit Impact -> Supply Shift

Marking Points

Key points examiners look for in your answers

Award marks for clearly distinguishing between 'change in quantity supplied' (price) and 'change in supply' (non-price factors)
Credit responses that explicitly link changes in production costs to changes in profit margins and the subsequent incentive to supply
Diagrams must be fully labelled (Price, Quantity, S1, S2) with arrows indicating the correct direction of the shift
Analysis must demonstrate the chain of reasoning: Event -> Cost Impact -> Profit Impact -> Supply Shift

Examiner Tips

Expert advice for maximising your marks

💡When drawing diagrams, always draw the original equilibrium first, then the shift, then the new equilibrium
💡Use the acronym PINTSWC (Productivity, Indirect taxes, Number of firms, Technology, Subsidies, Weather, Costs) to recall factors
💡In 9-mark questions, ensure you evaluate the 'magnitude' of the supply shift or the 'time lag' involved
💡Always reference the specific business in the item (context) rather than speaking about 'firms' generally

Common Mistakes

Pitfalls to avoid in your exam answers

Confusing 'costs of production' (firm's expense) with 'price' (consumer's payment)
Shifting the Demand curve instead of the Supply curve when analysing factors like technology or subsidies
Describing a movement along the curve instead of a shift when a non-price determinant changes

Key Terminology

Essential terms to know

Likely Command Words

How questions on this topic are typically asked

State

Define

Calculate

Explain

Discuss

Evaluate

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