Unit 4: Supply Review

What is supply?

• The willingness and ability of producers to offer goods and services for sale

• The demand for goods and services by consumers

• The price at which goods and services are sold

• The quantity of goods and services produced

According to the law of supply, what happens when prices decrease?

• Quantity supplied decreases

• Quantity supplied increases

• Producers stop offering goods and services for sale

• Demand for goods and services decreases

According to the law of supply, what happens when prices increase?

• Quantity supplied decreases

• Quantity supplied increases

• Producers stop offering goods and services for sale

• Demand for goods and services decreases

What is the role of price with existing firms?

• An increase in price increases the firm's profits

• An increase in price decreases the firm's profits

• Price has no impact on existing firms

• Existing firms always lower their prices

How do rising prices impact new firms?

• An increase in price increases the firm's profits

• An increase in price decreases the firm's profits

• Price has no impact on existing or new firms

• Rising prices will draw new firms into a market, which will increase the quantity supplied

What factors can change supply?

• Input costs, labor productivity, technology, government action, producer expectations of price change, weather, and number of producers

• Demand, price, and consumer preferences

• Market competition and advertising

• Government regulations and taxes

What determines whether the supply of a good will be elastic or inelastic?

• Time

• Price

• Demand

• Producer expectations

What does a supply schedule show?

• The conditions that will cause supply at every price level to shift

• The relationship between price and quantity supplied for a specific good

• How much consumers are willing to spend for a particular good/service

• The total a producer wants to supply for this month

What is the only condition taken into account in a supply schedule?

• Labor

• Input Costs

• Government Action

• Price

What is a supply curve?

• A chart showing a firms production for the last year

• A graph of the quantity supplied of a good at different prices

• How much consumers are willing to purchase at each price

• A graph of a firm's projected output based on their input costs