Supply

Question 1

Supply is the quantity of a good that producers are:

Accepted Answer

Willing and able to sell at each price — Supply is what producers are willing and able to sell at each price.

Question 2

According to the law of supply, as price rises, quantity supplied:

Accepted Answer

Rises — The law of supply states that a higher price leads to a higher quantity supplied.

Question 3

A normal supply curve slopes:

Accepted Answer

Upward from left to right — Because quantity supplied rises with price, the supply curve slopes upward.

Question 4

A change in the price of the good itself causes:

Accepted Answer

A movement along the supply curve — A change in the good's own price is shown by a movement along the supply curve.

Question 5

A rise in the price of a good leads to an:

Accepted Answer

Extension in supply — A higher price raises quantity supplied, an extension along the curve.

Question 6

Which of the following shifts the supply curve to the right?

Accepted Answer

A fall in production costs — Lower costs make production more profitable, increasing supply and shifting it right.

Question 7

A government subsidy given to producers will usually:

Accepted Answer

Increase supply — A subsidy lowers costs for producers, increasing supply and shifting the curve right.

Question 8

Improved technology in a factory is most likely to:

Accepted Answer

Increase supply — Better technology lowers unit costs and raises output, increasing supply.

Question 9

A new tax placed on producers of a good will:

Accepted Answer

Shift supply to the left — A tax raises costs, reducing supply and shifting the curve left.

Question 10

A fall in the price of a good, with no other change, causes a:

Accepted Answer

Contraction in supply — A lower own-price reduces quantity supplied, a contraction along the curve.