Law of Supply

The Law of Supply states:

• as price increases, supply increases
• as prices decrease, supply increases
• as price increases, quantity demanded decreases
• as price decreases, quantity demanded decreases

What factors influence production decisions the most?

• need to maximize profit & costs of production
• costs of production & the availability of substitutes
• need to maximize profit and the consumers' price expectations
• law of diminishing returns and total costs

Production costs that do not change as the level of output changes:

• fixed costs
• variable costs
• total costs
• marginal costs

Production costs that do change as the level of output changes:

• fixed costs
• variable costs
• total costs
• marginal costs

The sum of fixed and variable costs:

• fixed costs
• variable costs
• total costs
• marginal costs

Supply means that a seller is ______________and _____________ to sell a good.

• willing and happy
• willing and able
• willing and hopeful

Does this supply schedule follow the law of supply?

• Yes
• No

If the cost of resources go up, what happens to supply?

• Go up
• Go down
• Stay the same

If technology improves, what effect does this typically have on supply?

• go up
• go down
• stay the same

If the government increases taxes on certain businesses, what happens to the supply?

• Go up
• Go down
• stay the same