Chapter 5 Supply

Which of these would an item’s producer be most likely to do if total revenue on that item began to drop?

• produce less of that item

• produce more of that item

• raise the price of that item

• lower the price of that item

Which of these best describes the influence of high prices on the behavior of producers?

• High prices are an incentive for producers to produce less.

• High prices are an incentive for producers to produce more

• High prices have no significant influence on the behavior of producers.

• High prices influence producers to use fewer raw materials and less labor

Which of these industries has the least elastic supply curve?

• the toy industry

• the nuclear industry

• the automobile industry

• the entertainment industry

Which of these do producers of an item hope to achieve when adopting new technologies?

• inelasticity of supply of that item

• a repeal of subsidies for production of that item

• a shift of the supply curve for that item to the left

• a shift of the supply curve for that item to the right

Which term denotes the change in total income when one additional unit of output is added?

• total product

• supply schedule

• change in supply

• marginal revenue

Which two terms are the most similar in meaning?

• fixed costs and overhead

• variable costs and overhead

• marginal costs and fixed costs

• marginal costs and variable costs

Which term is generally associated with machines and other capital goods?

• total cost

• fixed cost

• variable cost

According to the Law of Supply, which of these would happen to an item as its price rose?

• Producers would make less of it.

• Producers would make more of it.

• Producers would increase the price even more.

• Producers would lower the price on similar items.

Which of these describes an effect of increased government regulation on producers?

• It shifts their market supply curve to the right

• It shifts their market supply curve to the left.

• It prompts them to increase output at all possible prices.

• It encourages production by requiring the use of new technology.

Which of these describes an item for which a change in its supply is proportional to a change in its price?

• elastic

• inelastic

• unit elastic

• demand elastic