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The impact and implications of changes in supply

The impact and implications of changes in supply. A decrease in supply will mean that producers will have to find alternatives to produce. This may mean some of the resources will no longer be used.

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The impact and implications of changes in supply

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  1. The impact and implications of changes in supply

  2. A decrease in supply will mean that producers will have to find alternatives to produce. • This may mean some of the resources will no longer be used. • E.g. if due to increased costs of production (the price of rimu wood increases) a building business decided to no longer make Rimu T&G floor boards. A machine they used to do the grooves is now useless. They also make the machine operator redundant.

  3. An increase in supply will mean that more resources will need to be found, this may include hiring and training new workers.

  4. Profit • Firms are in business to make a profit • Many implications of changes in supply or quantity supplied will relate to profitability • It may mean that a business becomes relatively more or relatively less profitable • e.g Profit=Revenue – costs If the price increases, quantity supplied increases, revenue (price x quantity) increases: this should increase profits.

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